Energy Efficiency Market Research Articles

Standard Setting with Considerations of Energy Efficiency Evolution and Market Competition

EE (energy efficiency) level, an indispensable index reflecting the environmental performance of products, can be improved by the EE innovating effort of the producer. Considering both the evolution of EE level and market differentiation, we develop a Stackelberg differential game between a policy maker who sets the EE standard and multiple competing producers with different initial EE levels who decide the EE innovation simultaneously. As there exist numerous possible reactions for each producer under a given EE standard about whether to meet the EE standard or not, whether there exists an equilibrium is what we pay special attention to. We find that, under a given EE standard, there indeed exists a unique optimal reaction for each producer, and there exists an equilibrium. Moreover, we find that as green awareness or initial EE level increases, both the EE standard and EE innovation increase. Additionally, if policy maker pays more attention to consumer welfare and environmental performance rather than profit of producer, a more strict EE standard would be set. Also, both less information about the initial EE level and more competition among producers induce lower EE standard and social welfare.

Identification of the basic elements of the innovation-analytical platform for energy efficiency in project financing

This analytical study focuses on the financing of energy efficiency projects in Ukraine. In this article, the authors analyze the state and dynamics of the modern market of energy resources both on a global scale and within Ukraine, and it was discovered that the potential of the energy efficiency market is extremely large and interesting for different groups of bank investors. In the course of the study, it was revealed that private households and industrial enterprises are the largest energy consumers in Ukraine, which confirms the necessity of implementing a public program for financing energy efficiency projects. The study of Ukraine’s legislative framework has made it possible to clearly define the concept of energy efficiency and to highlight which projects can be considered energy-efficient. It is noted that the state actively develops and implements a policy to increase energy consumption savings both among private individuals and among producing enterprises, which is implemented at the state level by a specially created Energy Efficiency Fund. As a specific tool for analyzing energy efficiency projects, the authors suggest using benchmarking technology, which provides the opportunity to highlight the strengths and weaknesses of a specific energy saving project, as compared to the top project in the industry. As a result, in the course of the conducted analytical studies, the authors proposed a specific tool for the analysis of energy efficiency financing projects in Ukraine, which includes five priority areas for which it is necessary to build a methodology for assessing the borrower’s creditworthiness, which seeks to implement a project in the field of energy saving.

Refining estimates of air conditioning energy consumption in Asian countries: stock volume and energy efficiency labeling and standard

In order to evaluate how the standard and labeling program for energy efficiency reduces energy demand in an economy, we must know how many appliances work and the total energy consumption capacity developed before and after the introduction of the program. This paper calculates the stock of air conditioners and its total electricity consumption capacity based on GfK market survey and collected data by authors. The results show that Japan has experienced a substantial reduction of electricity demand from air conditioning overall in the economy. However, Thailand and China maintain their average electricity consumption levels, but are unable to reduce total demand. A study of the energy efficiency standard-labeling mechanism development and market outcomes reveals that Thailand and China fail to continuously improve energy efficiency, although the mechanism curbed the increasing inefficiency. This implies that China’s and Thailand’s mechanisms need to raise the upper bound of the distribution of energy efficiency.

Performance-Based Contracts for Energy Efficiency Projects

Energy efficiency projects are often executed by specialized entities, namely energy service companies (ESCOs). A typical ESCO's core business is conducted using performance-based contracts, whereby payment terms depend on the energy savings achieved. Despite their success in public, commercial, and industrial sectors, ESCOs in the residential sector are involved in fewer projects and face several challenges. First, an energy efficiency project often leads to changed consumption behavior; hence it is more difficult to evaluate the energy savings that are due to the project itself. The second challenge is that residential clients are more risk averse and, thus, less willing to contract for projects whose outcomes are uncertain. Third, a lack of monitoring protocols leads to ESCO's moral hazard problems. This paper studies ESCO contract design issues, focusing primarily on the residential market for energy efficiency. As opposed to other sectors, coordinating contracts do not exist. We show, however, that simple piecewise linear contracts work reasonably well. To improve their profitability, ESCOs can reduce uncertainty about the technology employed and/or develop ways of verifying post-project energy efficiency. Since policy makers are understandably keen to promote energy efficiency, we show also how regulations and monetary incentives can reduce inefficiencies in ESCOs' relationships and thereby maximize environmental benefits.

Design and Evaluation of Policy Instruments for Energy Efficiency Market

The concept of energy efficiency market as basis for energy efficiency policy making enables better understanding of the overall environment where policy needs to be implemented. Based on the market assessment, policy makers are faced with the challenge of designing policy instrument that will release identified brakes to energy efficiency. Following the market assessment, the framework for design of policy instruments and measures needs to be established. It uses a theory-based approach to provide the insight in the supposed operation of an instrument or measure and integrates the evaluation of impacts already in the design phase. In this paper, the authors categorized policy instruments in several categories and additionally described which side of the market they address and in which typical development stages of the market development their application is the most needed. For every step in the process, indicators are defined and success or failure “values” of these indicators determined. This approach can give clear picture to the policy makers what needs to be monitored and evaluated ex post . This ex post evaluation will enhance the knowledge of instrument's operation. In this paper, the authors established a detailed theory (theory-based approach) on how the instrument is supposed to work. Although this theory-based approach is known and utilized in project management, it is not mainstreamed in energy efficiency policy.

THE DEVELOPMENT OF THE STRATEGY OF ENERGY SERVICE MARKET

Introduction. The current state of the energy service market in Ukraine is underdeveloped, which encourages the implementation of certain methods of its development. In order to improve the cost-effective climate in the market there is the use of certain tools that are characterized by appropriate principles and methods. Objective. Determination of the economic potential of the energy efficiency market and the development of a strategy for its development. Method (methodology): During the research, the main methods were: analysis and synthesis, used in assessing the real state of the market; planning methodology used as a set of theoretical conclusions, general patterns, scientific principles of plan development, their justification and description in accordance with modern requirements of the energy service market. Results. The general provisions of the formation of the strategy of the development of energy service have been defined. The expediency of the implementation of such a strategy has been substantiated and the further development of the market has been shown. The obtained research results can be used for further scientific development and assessment of the level of the effectiveness of the strategy.

Does energy and CO2 emissions performance of China benefit from regional integration?

Low energy and carbon efficiency and widespread market segmentation are two stylized facts of China's regional economies. This paper evaluates energy and CO2 emissions performance using a newly developed non-radial directional distance function, and China's regional integration is investigated using a price approach. The study points to evidence that: (1) most provinces do not perform efficiently in terms of energy use and CO2 emissions with performance gaps among regions becoming larger, indicating regional segmentation; (2) magnitude of regional integration has increased dramatically, while China's eastern provinces are less integrated in domestic side due to their convenience to international openness; (3) regional integration has significant and robust positive effects on energy and CO2 emissions performance with over 70% of effects coming from artificial barriers, rather than geographical distance; (4) international openness is also beneficial for promoting energy and CO2 emissions performance, but cannot substitute for regional integration because of China's specialization in energy-intensive manufacturing in the global economy. Based on the empirical findings, we suggest that central government should continue to encourage regional integration given that local governments have incentives to fragment because it is a way of promoting energy and CO2 emissions performance and stimulating economy at the same time.

Are there first mover advantages for producers of energy-efficient appliances? The case of refrigerators

How can the position of countries competing for the energy efficiency market be assessed? To answer this question, we analyze the situation of the global refrigerator market. The lead market is Germany, followed by Korea und Italy. First mover advantages can be realised in Germany, backed by high European efficiency standards which diffuse after some years to other countries. Since the pay-off time for energy-efficient refrigerators is quite long, a second mover strategy with low prices is promising especially when electricity prices and national income are low, as in Asia and Russia. Some producers apply both strategies in different markets.

The development of an energy-efficient remodeling framework in South Korea

Buildings are responsible for serious negative environmental impacts caused by their excessive energy and resource consumption, which all contribute to global warming due to greenhouse gas emissions. Many governments have thus implemented energy-saving strategies and technologies for both new and existing buildings since buildings have long life spans. Energy efficient building practices can minimize negative environmental impacts and improve economic growth and social prosperity, but although the use of energy efficient methods for new buildings is now widely accepted in South Korea, they are seldom implemented for the renovation of existing buildings. Here we report the development of a highly efficient Energy-efficient Remodeling Framework (ERF) to facilitate the implementation of energy-saving strategies and technologies for existing buildings. It covers every stage of the project, from the initial identification of an energy-efficient building to its eventual Operation and Maintenance (O&M), focusing specifically on appropriate energy-saving strategies and technologies for existing buildings in South Korea. The ERF includes tools for energy-efficient renovation, including ‘E-Scope’, ‘E-Ray’, ‘Impact Tables A&B’, and ‘E-Spectrum’, that have been developed to support energy-efficient remodeling processes in South Korea. The new ERF framework can help government agencies and the construction industry to accelerate the process of expanding the energy efficient remodeling market and reduce energy consumption in the existing building stock and the associated carbon emissions, simultaneously improving the nation's energy security. The ERF will provide a useful national model for creating more energy efficient buildings and guide the creation of an energy-efficient remodeling policy in the Korean context.

The growing role of banks in the implementation of energy efficiency projects in the Republic of Serbia

Energy efficiency market in the Republic of Serbia, though with great potential, is still in the early stages of its development. The subject of this paper is to analyze some aspects of the energy efficiency market in the Republic of Serbia, with the aim to highlight the opportunities and growing role of banks in the implementation of these projects. Having in mind the motives and factors of energy efficiency market development in our country, the paper starts with an analysis of the regulatory framework as the base of business opportunities that are provided to all potential and interested partners to carry out these types of projects. The study then focuses on the possible role and growing importance of banks in this promising field, as well as on the modalities of financial support which are common for the energy efficiency market both on the domestic market and the European Union market - as an illustration of the framework of financial instruments that has been developed to stimulate and further develop the factors of the energy efficiency market.

Connection between Energy Efficiency and Real Property Market Value

Connection between Energy Efficiency and Real Property Market Value

Contrasting self-reported willingness to pay and demonstrated purchase behavior for energy-saving technologies in a small island developing state

Sustainable development in small island developing countries often hinges upon the successful adoption and diffusion of energy technologies developed abroad. To guide investments and policies seeking to promote new energy efficiency technologies academic and marketing studies often rely upon consumer self-reports of willingness to pay (WTP) for the environmental and economic benefits such technologies may provide. But marketing research has long reported disparities between consumer self-reports of willingness to pay and the actual amounts consumers will pay when making a purchase decision. This study uses the results of a survey and associated coupon distribution in Saint Lucia to contrast self-reported willingness to pay for energy-efficient compact fluorescent light bulbs (CFLs) with actual consumer behavior in a developing country context. Survey responses suggested that more than 94% of urban consumers in Saint Lucia were willing to pay some price premium for a high quality CFL bulb. However, when given a coupon allowing them to purchase a CFL bulb at a price equal to or below their self-reported willingness to pay, only one-third of the consumers actually purchased the product. High income respondents, low income respondents, and younger respondents were among those most likely to not purchase a CFL bulb when offered the chance to do so at or below their self-reported willingness to pay. The presence of systematic discrepancies between self-reported willingness to pay and observed consumer behavior in CFL markets has important implications for energy efficiency market research, coupon-based incentive programs and energy policy in Saint Lucia and other developing nations.

Environmental and Technology Policy Options in the Electricity Sector: Interactions and Outcomes

Myriad policy measures aim to reduce greenhouse gas emissions from the electricity sector, promote generation from renewable sources, and encourage energy conservation. To what extent do innovation and energy efficiency (EE) market failures justify additional interventions when a carbon price is in place? We extend the model of Fischer and Newell (2008) with advanced and conventional renewable energy technologies and short and long-run EE investments. We incorporate both knowledge spillovers and imperfections in the demand for energy efficiency. We conclude that some technology policies, particularly correcting R&D market failures, can be useful complements to emissions pricing, but ambitious renewable targets or subsidies seem unlikely to enhance welfare. The desirability of stringent EE policies is highly sensitive to the degree of undervaluation, which also has implications for policies that keep electricity prices low. Even with multiple market failures, emissions pricing remains the single most cost-effective option for reducing emissions.

European experiences with white certifirecate obligations: A critical review of existing evaluations

White certificate obligations impose energy savings targets on energy companies and allow them to trade energy savings certificates. They can be seen as a means of internalizing energy-use externalities and addressing energy efficiency market failures. This paper reviews existing evaluations of experiences with white certificate obligations in Great Britain, Italy and France. Ex ante microeconomic analysis find that the obligation is best modelled as a hybrid subsidy-tax instrument, whereby energy companies subsidize energy efficiency and pass-through the subsidy cost onto energy prices. Ex post static efficiency assessments find largely positive benefit-cost balances, with national differences reflecting heterogeneity in technical potentials. Compliance involved little trading between obligated parties. Whether the cost borne by obligated parties was recovered through increased energy revenue could not be ascertained. Ex post dynamic efficiency assessments find that in addition to addressing liquidity constraints through subsidies, white certificate obligations seem to have addressed informational and organisational market failures. Confidence in these conclusions is limited by the fact that no econometric analysis was performed. Yet the lack of publicly available data, a counterpart to the rationale of the instrument of harnessing private financing, makes any empirical evaluation of white certificate obligations challenging.

Environmental and Technology Policy Options in the Electricity Sector: Interactions and Outcomes

Myriad policy measures aim to reduce greenhouse gas emissions from the electricity sector, promote generation from renewable sources, and encourage energy conservation. To what extent do innovation and energy efficiency (EE) market failures justify additional interventions when a carbon price is in place? We extend the model of Fischer and Newell (2008) with advanced and conventional renewable energy technologies and short and long-run EE investments. We incorporate both knowledge spillovers and imperfections in the demand for energy efficiency. We conclude that some technology policies, particularly correcting R&D market failures, can be useful complements to emissions pricing, but ambitious renewable targets or subsidies seem unlikely to enhance welfare when placed alongside sufficient emissions pricing. The desirability of stringent EE policies is highly sensitive to the degree of undervaluation of EE by consumers, which also has implications for policies that tend to lower electricity prices Even with multiple market failures, emissions pricing remains the single most cost-effective option for reducing emissions.

Transforming the energy efficiency market in California: Key findings, lessons learned and future directions from California's market effects studies

In the last three years, the California Institute for Energy and Environment (CIEE), along with the California Public Utilities Commission (CPUC), managed three market effects studies that were funded by the CPUC. This paper summarizes the key findings from these studies that focused on compact fluorescent lamps (CFLs), residential new construction (RNC), and high bay lighting (HBL) 1 , with a particular focus on changes to California’s market effects evaluation protocol and lessons learned during the evaluation of market effects. This paper also summarizes the key results from a survey that was conducted by CIEE in February 2011 to determine what additional studies should be conducted in the evaluation of market effects.

Transaction costs analysis of low-carbon technologies

Transaction costs (TCs) must be taken into account when assessing the performance of policy instruments that create markets for the diffusion and commercialization of low-carbon technologies (LCTs). However, there are no comprehensive studies on the development and application of transaction cost analysis to LCTs. In this meta-analysis, a wide-ranging evaluation of TCs associated with energy efficiency, renewable energy, and carbon market technologies is provided. There is a plethora of different definitions of, and measurement techniques to estimate, TCs. There is wide variation in the quantitative estimates, which can be attributed to factors such as the definition used, data collection, quantification methods, the type and size of technologies, the regulatory frameworks, the complexity of transactions, and the maturity of policy instruments. It is concluded that TCs are highly specific to both LCTs and policy instruments and that a common methodological approach is needed to avoid misleading policy analysis of the extant and future assessments. Policy relevance Transaction costs (TCs) accrued by, for instance, the search for information, due diligence, monitoring and verification (M&V) activities, must be considered in the design, implementation, and assessment of policy instruments. Such costs can have a negative effect on the performance of policy instruments aimed at the diffusion and commercialization of low-carbon technologies. It is shown here that TC analysis is mostly technology and policy context-specific and hence that it is not advisable to make generalizations about sources and estimates. The nature and scale of TCs are likely to differ due to a variety of endogenous determinants (e.g. size and performance of technologies), exogenous drivers (e.g. regulatory policy frameworks), and methodological aspects (e.g. quantification techniques). Several measures and strategies have the potential to reduce TCs, including standardized full cost accounting systems, an ex ante M&V approach, project bundling, and streamlining of procedures.

Reducing carbon footprint in cement material making: Characterizing costs of conserved energy and reduced carbon emissions

Abstract Adoption of energy efficient technologies is an important strategy to reduce demand for fossil fuels and carbon footprint in cement making. We characterized the costs of energy savings and carbon-emission reduction from applying energy efficiency technologies in cement-making plants in the United States in three historical years. Final energy savings resulting from efficiency measures identified in this study were estimated as 82 PJ, 125 PJ, and 95 PJ in 1994, 2004, and 2010, respectively; equivalent to approximately 20%, 25%, and 31% of the sector's annual final energy use. The associated carbon-emission reduction was 2.1 million metric tons of carbon (MtC), 3.3 MtC, and 2.5 MtC in 1994, 2004, and 2010, respectively. Using the concepts of cost of conserved energy (CCE) and cost of carbon-emission reduction (CCR), we estimated that cost effective measures contributed to final energy savings in the range of 15–25% of the sector's annual energy use, and carbon-emission reduction equals to 8–12% of the sector's annual carbon emissions. This study also points out the importance of future monitoring effort to track efficiency measure implementation for the industrial sector, and the need for an improved market for energy efficiency and reduced carbon footprint.

Environmental and Technology Policy Options in the Electricity Sector: Interactions and Outcomes

Myriad policy measures aim to reduce greenhouse gas emissions from the electricity sector, promote generation from renewable sources, and encourage energy conservation. To what extent do innovation and energy efficiency (EE) market failures justify additional interventions when a carbon price is in place? We extend the model of Fischer and Newell (2008) with advanced and conventional renewable energy technologies and short and long-run EE investments. We incorporate both knowledge spillovers and imperfections in the demand for energy efficiency. We conclude that some technology policies, particularly correcting R&D market failures, can be useful complements to emissions pricing, but ambitious renewable targets or subsidies seem unlikely to enhance welfare when placed alongside sufficient emissions pricing. The desirability of stringent EE policies is highly sensitive to the degree of undervaluation of EE by consumers, which also has implications for policies that tend to lower electricity prices. Even with multiple market failures, emissions pricing remains the single most cost-effective option for reducing emissions. Classification-JEL: Q42, Q52, Q55, Q58

Evaluating direct energy savings and market transformation effects: A decade of technical design assistance in the northwestern USA

This paper documents the direct energy savings and energy efficiency market transformation impacts of a multi-state design assistance program in the northwestern US. The paper addresses four specific aims. (1) It provides a conservative and justified estimate of the direct energy savings associated with design assistance activities of a market transformation program from 2001 to 2010. (2) It provides a rigorous methodology to evaluate direct energy savings associated with design assistance market transformation programs. (3) It provides a low-cost replicable method to predict energy savings in new buildings by evaluating the integrated design process. (4) It provides quantitative indicators useful for estimating indirect energy savings from market transformation. Applying the recommended analysis method and assuming a 12-year measure life, the direct energy savings of the population (626 buildings; 51,262,000ft2) is estimated as 45.3aMW (average megawatts) (electric), and 265,738.089therms (non-electric). If the entire program budget were divided into the electric savings only, the Lab Network cost per kWh saved ranged from $0.0016 to $0.003 using the recommended method and $0.0092/kWh using the most conservative method. These figures do not isolate contextual influences or represent total resource cost. Statistically significant correlations (r2=0.1−0.3) between integrated design scores and energy savings are reported.