Three essays on facilitating electrification and energy efficiency from the demand side

Abstract

To tackle climate change, one of the basic decarbonization strategies is to decarbonize end-use applications through electrification and energy efficiency. This dissertation comprises three essays focused on the effectiveness and implementation of the interventions aimed at electrification and energy efficiency in the building sector of the demand side. It is not easy to facilitate the transition to energy efficiency and electrification. In the building sector, much literature has found the “energy efficiency gap”, meaning that there is a persistent gap between the level of energy efficiency investment that is projected to save money and the investment that actually occurs despite the benefits from energy-efficiency investments. In many situations, the energy efficiency upgrade is in conjunction with electrification.Two types of interventions have been widely utilized to help close the “energy efficiency gap” and “electrification gap” in the building sector: price-based incentives and information-provision interventions. In my dissertation, the first essay focuses on (price-based) subsidy interventions while the other two essays focus on information-provision interventions to alter consumers’ energy demand. The first essay aims to evaluate the effectiveness of the subsidies (rebate and loan programs) on residential air-source heat pump adoption based on the evidence from North Carolina of U.S. Many national, state-level, and city-level decarbonization plans include the transition to heat pumps. The rebate and loan programs are the two widely-adopted incentives for residential heat pumps in the U.S. Using the method of Difference-in-Differences (DID) in conjunction with spatial discontinuity, this essay estimates the impact of a rebate program ($300-450 per system) on heat pump adoption rate and compares it with the effect of two loan programs (with different annual interest rates: 9% and 3.9%). I find that the rebate program increases the adoption density by 13% in a year and shows advantages in increasing the heat pump adoption rate compared to the two loan programs. The second essay finds a positive house price premium associated with air-source heat pump installations in the U.S., which policymakers can use to provide information campaigns to influence the adoption of heat pumps. In this essay, I apply the DID method and use a sample of 450,000 homes across 23 states of the U.S. to estimate the heat pump-induced house sales price premium. Residences with an air-source heat pump enjoy a 4.3-7.1% (or $10,400 - $17,000) price premium on average. Policymakers can use the information about potential price premiums to influence consumer choices, in addition to traditional energy guides, which typically focus on fuel costs. The third essay investigates the effectiveness of another type of information-provision campaign – special environmental events. Special environmental events, such as Earth Hour, World Environment Day, and Chinese National Energy Saving Week, can be regarded as a form of “nudge” to arouse people’s awareness of environmental protection and energy efficiency/conservation. Using a two-stage local linear method, I estimate the impacts of the three special environmental events on short-run electricity-saving behaviors using high-frequency smart meter data in Shanghai, China, for both residential and commercial consumers. I find that World Environment Day and National Energy Saving Week caused commercial users to reduce their electricity consumption by 1.35 kWh/hour and 0.6 kWh/hour intra-event, around 17% and 8% reduction compared to average consumption. Earth Hour did not lead to significant energy-saving effects for both residential and commercial users.