Advances in Evaluating Energy Efficiency Policies and Programs

This paper reviews the recent evidence on the effectiveness and cost-effectiveness of energy efficiency interventions. After a brief review of explanations for the energy efficiency gap, we explore key issues in energy efficiency evaluation, including the use of randomized controlled trials and incentives faced by those performing evaluations. We provide a summary table of energy savings results by type of efficiency intervention. We also develop an updated aggregate estimate of 2.8 cents per kilowatt hour (kWh) of net savings from utility energy efficiency programs but note that this estimate is based on aggregate utility-reported energy savings. Our review of the economics literature suggests that energy savings are often smaller than implied by utility-reported results, but some interventions appear to be cost-effective relative to the marginal cost of electricity supply.