Study Calls for More Utility-Based, Energy Efficiency Incentives

New types of financial incentives may be needed to persuade Americans to make energy efficiency home improvements, according to a Feb. 4, 2011 study by Alliance Associate Shelton Group.

The national study, Utility Pulse 2010, surveyed1,032 homeowners and renters in the United States from Oct, 29 to Nov. 3, 2010, on their savings expectations for energy efficiency programs, as well as whether incentives really motivated them to invest in energy efficiency products. 

Efficiency Lowers Energy Bills, Grows Customer Satisfaction

The study found that saving money was the biggest driver for energy efficiency home improvements.

• Overall, 84% of homeowners and 73% of renters made at least one low-cost, energy-efficient change to their current home within the past twenty years, such as replacing incandescent light bulbs and installing weather stripping.
• Of the roughly 830 people who undertook an energy-efficient improvement or purchase, 23% did so with a rebate or financial incentive.
• Of the 195 people who used incentives for their home retrofits, 41% got utility rebates and 39% got federal tax incentives.
• Utility bill reductions from energy efficiency improvements did not meet about one-quarter of respondents’ expectations. However, 44% of unsatisfied consumers believe they should make more improvements.
• About 17% of respondents participated in an energy assessment, and 73% of those who carried out the assessment’s recommendations were satisfied with their resultant lower utility bills.

The tipping point for bill-reduction satisfaction is investing in five energy efficiency home improvements of any kind, the study found.

Utility-Based Incentives Could Boost Energy-Saving Changes

Greater incentives could get consumers to make take more energy-efficient actions, but the federal government just decreased several important incentives in the tax extenders bill. So, it’s up to the private sector to increase incentives, the study authors said.

“Utilities, manufacturers and retailers are going to have to step up their incentives – and get a lot more creative and targeted in marketing energy efficiency,” said Suzanne Shelton, president of Shelton Group, who added that utilities must expand existing energy efficiency programs, as well as provide increased financial incentives that are tailored to different types of consumers.  The study authors note that more than half of respondents are willing to participate in demand-side management programs.

In addition, utility-driven consumer education campaigns, such as Energy Upgrade California, incentivize consumers to make energy efficiency improvements by demonstrating the lifetime benefits of saving energy.

By Alliance Policy Intern Francesca Wahl