Suppose you are a regulator in a state or country new to energy efficiency programs and you want to design a set of financial incentives to encourage efficient appliances and equipment.
If you want to design something that generates significant energy and carbon emissions savings in a cost-effective manner, you have a number of decisions to make: What products and efficiency measures should you target? Should you offer incentives for very high-performing, super-efficient devices that may have a smaller market, or for more widely available but somewhat less efficient measures? How large should these incentives be? Should you offer incentives upstream (to manufacturers), midstream (to retailers), or downstream (to consumers)? Should you bundle the incentives with information and advertising, and if so, what is the best allocation of program resources? How do you need to vary your approach in different markets?
The U.S. appears, at first glance, to offer lots of evidence to help you make these choices. A search of the Database of State Incentives for Renewables and Efficiency yields 1124 separate U.S. programs that offer some form of rebate for energy efficiency measures. Programs have existed since the 1970s, so you have a long history to draw upon. Moreover, utility demand-side management (DSM) programs, which make up the lion’s share of energy efficiency programs, are routinely evaluated. In fact, U.S. efficiency program administrators budgeted at least $181 million for DSM program evaluation in 2011.
Unfortunately, despite the many programs and the many millions of dollars spent evaluating them, there is less evidence on what works and what doesn’t than there could and should be.