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Exploring Energy Technology Substitution for Reducing Atmospheric Carbon Emissions

Karl E. Knapp

Year: 1999
Volume: Volume20
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol20-No2-5
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Abstract:
This paper presents a simple method for incorporating the time required for new technology to penetrate the market and subsequently substitute for an old one when evaluating the ability of new energy technology to impact global climate change. The methodology is applied to the two largest sources of energyrelated carbon dioxide: electricity generation and motor vehicles. Carbon-free road transportation is hypothesized to substitute for petroleum-fueled vehicles and carbon-free electric power generation for fossil-fueled electricity based on empirical analogs for substitution dynamics parameters, beginning in the year 2000. The examples imply that near-term significant reductions to 1990 carbon emissions levels via technology substitution are unlikely. The time scale relevant for realizing reductions in carbon emissions is several times the expected lifetime of the products that new technology is intended to replace.





Cost-Effectiveness of Electricity Energy Efficiency Programs

Toshi H. Arimura, Shanjun Li, Richard G. Newell, and Karen Palmer

Year: 2012
Volume: Volume 33
Number: Number 2
DOI: 10.5547/01956574.33.2.4
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Abstract:
We analyze the cost-effectiveness of electric utility ratepayer–funded programs to promote demand-side management (DSM) and energy efficiency (EE) investments. We specify a model that relates electricity demand to previous EE DSM spending, energy prices, income, weather, and other demand factors. In contrast to previous studies, we allow EE DSM spending to have a potential long-term demand effect and explicitly address possible endogeneity in spending. We find that current period EE DSM expenditures reduce electricity demand and that this effect persists for a number of years. Our findings suggest that ratepayer funded DSM expenditures between 1992 and 2006 produced a central estimate of 0.9 percent savings in electricity consumption over that time period and a 1.8 percent savings over all years. These energy savings came at an expected average cost to utilities of roughly 5 cents per kWh saved when future savings are discounted at a 5 percent rate. Keywords: Energy efficiency, Demand-side management, Electricity demand



The Effects of Electric Utility Decoupling on Energy Efficiency

Jenya Kahn-Lang

Year: 2016
Volume: Volume 37
Number: Number 4
DOI: 10.5547/01956574.37.4.jkah
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Abstract:
Most economists agree that revenue decoupling eliminates utilities' incentives to encourage overconsumption of energy, but critics argue that decoupled utilities have no incentive to promote energy efficiency. This paper models the repeated game between regulator and utility and shows that decoupled utilities have greater equilibrium utility demand-side management (DSM) investment in the presence of DSM-related shareholder incentives. It then shows empirically that decoupling is historically associated with significant residential electricity consumption reductions, augmented DSM spending levels, and increased DSM investment efficacy. Keywords: Decoupling, Demand-side management, Energy efficiency, Electric utility regulation



Vintage Capital, Technology Adoption and Electricity Demand-Side Management

Wenbiao Cai, Hugh Grant, and Manish Pandey

Year: 2018
Volume: Volume 39
Number: Number 2
DOI: 10.5547/01956574.39.2.wcai
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Abstract:
Demand-side Management (DSM) programs by electricity utilities report substantial energy savings that often receive little support from empirical studies. We argue that this discrepancy results from an inherently static view of technology adoption by utilities when estimating future energy savings. We illustrate this through a simple model of technology adoption, in which households operate different vintages of appliances and have heterogenous forecasts about the rate of future technological progress. An "energy efficiency gap" arises when households under-estimate the true rate of technological progress. We parameterize the model using data on refrigerators and show that a DSM program that subsidizes adoption of energy-efficient refrigerators yields small energy saving that, in most cases, do not justify the cost of the subsidy.



Evaluating the Energy-Saving Effects of a Utility Demand-Side Management Program: A Difference-in-Difference Coarsened Exact Matching Approach

Richard Boampong

Year: 2020
Volume: Volume 41
Number: Number 4
DOI: 10.5547/01956574.41.4.rboa
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Abstract:
This paper seeks to estimate the energy-saving effect of a Demand-Side Management program, specifically Gainesville Regional Utility's (GRU) high-efficiency central Air Conditioner (AC) rebate program in which GRU offers incentives to its customers to replace their old, low-efficiency AC unit with a high-efficiency model. We use a difference-in-difference coarsened exact matching approach to reduce the imbalance of pre-treatment characteristics between treated and control households. We find substantial annual energy savings of the high-efficiency AC program. We disaggregate the energy-saving effects into summer peak effects, winter peak effects, and non-peak effects. The results indicate that the summer peak effects are substantial and statistically significant while there are little or no statistically significant effects of the program on winter peak demand. Also, by following program participants over a three-year period, we find that there is no statistically significant rebound effect of the high-efficiency AC rebate program.





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