Energy is essential for human development; however, energy consumption is also responsible for large air and greenhouse gas emissions. As the concerns about global climate change have increased, reducing energy demand has gained more importance. This dissertation focuses on energy consumption in the building sector, especially the residential building sector. Energy efficiency and conservation, as a key strategy for reducing energy demand in the building sector, is favored by advocates and policymakers because it can be a cost-effective approach to reduce energy demand. This dissertation takes a three-essay format and adds to the discussion on energy efficiency and the energy efficiency gap.

Essay 1 evaluates energy efficiency retrofits. Many past estimations of energy efficiency performance are based on the predicted savings from simulation or engineering models, and they overestimate the actual savings. This essay evaluates the electricity savings from Energize Phoenix program in Arizona, which includes 201 residential buildings and 636 commercial buildings during 2008-2013. Fixed effects panel regression is applied, and the results show energy savings are 12% for commercial buildings and 8% for residential buildings. The realized energy savings are 30-50% lower than the predicted ones by engineering models, implying that policymakers need to rely more on the empirical evaluations. Heterogeneity also exists among retrofits for different buildings.

Essay 2 investigates the adoption of energy efficiency. Although many market and behavioral factors have been proposed to explain the low adoption level of low-carbon technologies, the impact of one particular factor-electricity rate has not been fully discussed in the existing literature. Essay 2 investigates the association between time-of-use (TOU) electricity rate and the adoption of solar panels and energy-efficient air conditioners in residential buildings. The empirical evidence suggests that TOU consumers are associated with a 27% higher likelihood of solar panel installation, but they are not more likely to adopt energy-efficient air conditioners (ACs).

Essay 3 examines the existence of the energy efficiency gap and compares the social and private benefits from energy efficiency under different rates (TOU and non-TOU rate). This essay applies data on energy efficiency retrofits and hourly electricity demand for about 16,000 households during 2013-2017. A combination of a matching approach and fixed effects panel regression is employed. The results show that the private benefits of energy efficiency exceed the social benefits under both TOU and non-TOU rates but by different degrees. These results indicate that there should be potentially different levels of policy interventions towards energy efficiency for consumers on different rates.