Consumer Behavior in Energy-Efficient Homes: The Limited Merits of Energy Performance Ratings as Benchmarks

Abstract

In Germany, policy-induced energy efficiency improvements typically aim at reducing primary energy consumption. Private households, on the contrary, pursue the maximization of wellbeing, or in microeconomics jargon, the maximization of utility of the occupants. There is a marked difference between upfront-calculated energy performance ratings (EPRs) and realized heating energy consumption (HEC). From an energy and environmental policy point of view, a deviation of energy consumption from ex ante calculated EPRs is problematic, as it offers poor guidance for (prospective) homeowners, policy-makers and researchers relying on the EPRs as benchmarks. The EPR-HEC gaps reported are, apart from heterogeneity, i.e. deviations from the mean aggregate values, often attributed to (unanticipated) behavioral effects. From an energy economist’s point of view, energy rebound induced by a decreasing unit price per unit of energy service output is one explanation. The existing literature in this field almost entirely treats building-specific EPRs as universal standards, trying to explain the empirically observed discrepancies. In this paper, we investigate whether and to what extent the current EPR scheme in place in Germany today can address behavioral issues. To this end, we empirically investigate the deviations between EPRs used in regulation and observed HEC levels based on two different data sets for Germany. The results show that it is not necessarily the behavioral dimension, but rather the static and mostly technically guided calculations of the EPRs itself that account for the major part of this deviation. The results obtained and insights gained from our analysis highlight the need for further improvements in the field of EPR regulation and methodology.