The Energy Efficiency Debate – Cost vs. Savings

Solving the Energy Efficiency Quandary

MIT Technology Review, July 8, 2015. Image credit: PeteLinforth

That debate has gotten hotter since the release, in late June, of a study by researchers at the University of Chicago and the University of California, Berkeley. Entitled Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program, the study examined 30,000 Michigan households participating in the federal Weatherization Assistance Program (WAP), which has provided free home upgrades like insulation and weather stripping to low-income households since 1976. The results were striking: “The costs to deploy the efficiency upgrades were about double the energy savings.”

Critics have focused mainly on two arguments: they say that the economists (Michael Greenstone of Chicago and Meredith Fowlie and Catherine Wolfram of Berkeley) failed to account for WAP’s non-energy benefits, such as the health, comfort, and safety of the residents, and that the evidence from a single program targeting low-income households in one state doesn’t necessarily apply to other energy efficiency measures, such as smart thermostats, solar water heaters, and the like.

There’s plenty of counter-evidence: the Google-owned smart-thermostat provider Nest, for example, has highlighted a series of studies—from Nest subsidiary MyEnergy, the Energy Trust of Oregon, and Vectren—indicating that Nest devices reduce energy use by 13.9 to 15 percent for cooling and 10 to 12 percent for heating, savings users 9.6 percent on gas bills and 17.5 percent on electric bills.

Greenstone and his coauthors responded to the criticisms in a July 7 blog post. The weatherization program, which has served more than seven million homes, “is a compelling setting to learn about the returns to energy efficiency investments,” they say. “If one is attempting to assess the performance of commonplace residential energy efficiency investments on a large scale, there may be no better option.”

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