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Energy-saving Technology Adoption under Uncertainty in the Residential Sector

Author

Listed:
  • Dorothée Charlier

    (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique)

  • Alejandro Mosino

    (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)

  • Aude Pommeret

    (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)

Abstract

Home renovation is generally asserted to be a highly effective means for households to lower expenditures on energy. In this sense, home renovation can also be thought as a means to reduce GHG emissions. In this paper we consider a homeowner who makes an irreversible energy-efficiency investment in an uncertain environment. In a general equilibrium framework, we solve the program of a representative consumer who uses his wealth to invest in the energy-saving technology, to save or to consume energy goods and non-energy goods. Resolution is analytical in a zero discounting case and numerical for the general case, based on collocation and Chebychev polynomials. In particular, we show that the threshold triggering adoption depends not only on technological parameters but on preference parameters as well. Moreover, we show that uncertainty does not affect adoption in the same way as in a partial equilibrium framework.

Suggested Citation

  • Dorothée Charlier & Alejandro Mosino & Aude Pommeret, 2011. "Energy-saving Technology Adoption under Uncertainty in the Residential Sector," Post-Print hal-00937500, HAL.
    • Handle: RePEc:hal:journl:hal-00937500
    DOI: 10.2307/41615493
    Note: View the original document on HAL open archive server: https://hal.science/hal-00937500
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    References listed on IDEAS

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    Cited by:

    1. Prudence Dato, 2017. "Energy Transition Under Irreversibility: A Two-Sector Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(3), pages 797-820, November.
    2. Prudence Dato, 2018. "Investment in Energy Efficiency, Adoption of Renewable Energy and Household Behavior: Evidence from OECD Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    3. Mosiño, Alejandro, 2012. "Producing energy in a stochastic environment: Switching from non-renewable to renewable resources," Resource and Energy Economics, Elsevier, vol. 34(4), pages 413-430.
    4. Theofano Fotiou & Alessia de Vita & Pantelis Capros, 2019. "Economic-Engineering Modelling of the Buildings Sector to Study the Transition towards Deep Decarbonisation in the EU," Energies, MDPI, vol. 12(14), pages 1-28, July.

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