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Determining the efficiency of residential electricity consumption

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  • Andor, Mark Andreas
  • Bernstein, David H.
  • Sommer, Stephan

Abstract

Increasing energy efficiency is a key global policy goal for climate protection. An important step towards an optimal reduction of energy consumption is the identification of energy saving potentials in different sectors and the best strategies for increasing efficiency. This paper analyzes these potentials in the household sector by estimating the degree of inefficiency in the use of electricity and its determinants. Using stochastic frontier analysis and disaggregated household data, we estimate an input requirement function and inefficiency on a sample of 2,000 German households. Our results suggest that the mean inefficiency amounts to around 20%, indicating a notable potential for energy savings. Moreover, we find that the household size and income are among the main determinants of individual inefficiency. This information can be used to increase the cost-efficiency of programs aimed to enhance energy efficiency.

Suggested Citation

  • Andor, Mark Andreas & Bernstein, David H. & Sommer, Stephan, 2020. "Determining the efficiency of residential electricity consumption," Ruhr Economic Papers 870, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:870
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    Cited by:

    1. Chlond, Bettina & Goeschl, Timo & Kesternich, Martin, 2022. "More money or better procedures? Evidence from an energy efficiency assistance program," Working Papers 0716, University of Heidelberg, Department of Economics.
    2. Klára Čermáková & Eduard Hromada, 2022. "Change in the Affordability of Owner-Occupied Housing in the Context of Rising Energy Prices," Energies, MDPI, vol. 15(4), pages 1-18, February.
    3. Subal C. Kumbhakarⓡ & Emir Malikovⓡ & Christopher F. Parmeterⓡ, 2021. "Applications of efficiency and productivity analysis: editors’ introduction," Empirical Economics, Springer, vol. 60(6), pages 2657-2663, June.
    4. Jianmin You & Xiqiang Chen & Jindao Chen, 2021. "Decomposition of Industrial Electricity Efficiency and Electricity-Saving Potential of Special Economic Zones in China Considering the Heterogeneity of Administrative Hierarchy and Regional Location," Energies, MDPI, vol. 14(17), pages 1-22, September.
    5. Chlond, Bettina & Goeschl, Timo & Kesternich, Martin, 2022. "More money or better procedures? Evidence from an energy efficiency assistance program," ZEW Discussion Papers 22-020, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    Keywords

    household electricity consumption; stochastic frontier analysis; technical efficiency;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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