Utility rebates for ENERGY STAR appliances: Are they effective?

Abstract

We estimate the impact of utility cash rebates on the market share of ENERGY STAR appliances by exploiting the variation in timing and size of rebates across US states. We find that a dollar increase in the (population) weighted utility rebate raises the share of ENERGY STAR qualified clothes washers by 0.4%, but does not affect dishwasher and refrigerator shares. Using information on energy saved by an ENERGY STAR appliance and assuming a redemption rate of 40%, the cost per tonne of carbon saved is about $140 for the clothes washers rebate program. The corresponding cost of a megawatt hour saved (about $28) is lower than the estimated cost of building and operating an additional power plant and the average on-peak spot price. We conclude that ENERGY STAR clothes washers rebate program is, on average, a cost-effective way for utilities to reduce electricity demand.

Analysing the impact of ENERGY STAR rebate policies in the US

“…We find that the estimated impact of the rebate policies on the sales share of ENERGY STAR appliances ranges from 3.3 percentage points, when using a difference-in-differences approach, to 6.6 percentage points, when using a nonlinear model. The results are higher than the findings in Datta and Gulati (2014) who find that, on average, rebates increase the sales of ENERGY STAR clothes washers by 6%. Our estimates, based on the average sales share of ENERGY STAR appliances, indicate an increase in the sales share of between 9% and 18%.…”

“…They conclude that the programme is not cost-effective since the cost of reducing CO 2 emissions is over US$500 per tonne. Datta and Gulati (2014) use US state-level data and analyse rebates provided to buyers of ENERGY STAR-qualified clothes washers, refrigerators and dishwashers. They find that utility rebates raise the share of ENERGY STAR qualified clothes washers but do not appear to affect dishwasher and refrigerator shares.…”

“…Houde and Aldy (2014) The contribution of this paper is to study the effect of rebate policies on the sales of ENERGY STARlabelled household appliances using, firstly, a difference-in-differences approach, secondly, a difference-indifferences approach with a potentially endogenous rebate policy variable and, finally, a nonlinear model to account for the low within-variation of some of the explanatory variables. Another contribution is that, compared to the study by Datta and Gulati (2014), we also consider air conditioners in addition to clothes washers, dishwashers, and refrigerators. To apply our methodology we use information from 47 US states between 2001 and 2006 and publicly available data on ENERGY STAR sales shares, coverage of rebate policies and various socio-economic, weather and price variables.…”

The Effect of Mail-in Utility Rebates on Willingness-to-Pay for ENERGY STAR $$^{\textregistered }$$ ® Certified Refrigerators

“…The US government adopted this approach in the State Energy Efficient Appliance Rebate Program (SEEARP), a product of the 2005 Energy Policy Act and the 2009 American Recovery and Reinvestment Act that provided US states and territories with $300 million to fund rebates for energy efficient appliances (MacRae et al 2010). 1 Prior to SEEARP, many US electricity providers offered rebates for energy efficient appliances as a form of demand-side management, typically $25 or $50 for a refrigerator (Datta and Gulati 2010). After SEEARP, most US states began offering rebates ranging from $50 to $700 for an energy efficient refrigerator (USDOE 2010;DSIRE 2011).…”

Changes in consumer behavior as a result of the Home Appliance Eco-Point System: an analysis based on micro data from the Family Income and Expenditure Survey

“…Gaspar and Antunes (2011) note that as consumers' purchasing behavior of electrical appliances and energy efficiency are diverse, it is necessary to come up with the ideal eco-label that appeals to every type of consumer. Datta and Gulati (2014) have empirically shown that in the case of high efficiency clothes washers, policies such as subsidies to increase the share of eco-label product are cost effective.…”