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Utility Rebates for ENERGY STAR Appliances: Are They Effective?

  • Souvik Datta

    ()

    (Centre for Energy Policy and Economics (CEPE), Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Sumeet Gulati

    ()

    (Faculty of Land and Food Systems, University of British Columbia, Canada)

In this paper we estimate the increase in the market share of ENERGY STAR-qualified appliances that can be attributed to targetted cash rebates offered by utility companies. To estimate the impact of these incentives we use the variation in timing and size of the utility rebates across the US states. We then use these estimates along with information on the average energy saved by using an ENERGY STAR appliance relative to a non-ENERGY STAR appliance to provide an estimate on the cost per tonne of carbon saved by the rebate program. Our results show that a dollar increase in the rebate leads to a 0.3% increase in the share of ENERGY STAR-qualified clothes washers while the effect of rebates is not significant for dishwashers and refrigerators. Assuming a redemption rate of 40%, we calculate the cost of saving a tonne of carbon through the clothes washer rebate program to be around $158. The corresponding cost of a megawatt hour saved (about $32), is lower than the estimated cost of building and operating an additional power plant and the average on-peak spot price. We conclude that the ENERGY STAR clothes washers rebate programs are a cost-effective way for utilities to reduce energy demand.

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File URL: http://www.cepe.ethz.ch/publications/workingPapers/CEPE_WP81.pdf
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Paper provided by CEPE Center for Energy Policy and Economics, ETH Zurich in its series CEPE Working paper series with number 11-81.

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Length: 24 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:cee:wpcepe:11-81
Contact details of provider: Postal: ETH-CEPE, Zürichbergstrasse 18, 8032 Zürich
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Fax: +41-1-632 16 22
Web page: http://www.cepe.ethz.ch
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