Modeling Residential Energy Efficiency Policies

With funding from the US Department of Energy, the Climate & Energy Policy Lab partnered with Oak Ridge National Laboratory to analyze the cost-effectiveness of four federal policies promoting residential energy efficiency. The four federal policies were:

  • National Building Codes with Complete Enforcement,
  • On-Bill Financing,
  • Smart Meters with Dynamic Pricing, and
  • Mandated Disclosure with Home Energy Performance Ratings.

These policies were adapted from a June 2009 report by CEPL and ORNL (Making Homes Part of the Climate Change Solution), which examined twelve residential policies, focusing on the associated literature and potential barriers. In this more recent research, CEPL and ORNL relied on the National Energy Modeling System to project the residential energy impacts of four policies through 2035. Alternatives regarding policy designs and other assumptions such as discount rates and penetration levels were examined extensively.
Altogether, it is estimated that over 650 TBtu of energy in 2020 and over 2,100 TBtu of energy in 2035 could be saved through these four policies. All four policies have favorable social benefit-cost ratios, though alternative assumptions and policy designs can significantly alter these ratios. From the household perspective, energy savings generally exceed private costs. The findings suggest that with the right policies, cost effective opportunities for significant energy savings within the residential sector are available.  The results are summarized in a lengthy powerpoint presentation titled NEMS Modeling: Making Homes Part of the Climate Solution.