This piece was co-authored by Erica Myers is an assistant professor at the University of Illinois.

Energy efficiency programs promise to be a “win-win”: by reducing energy consumption, they lower households’ electricity bills and greenhouse gas emissions at the same time. That’s why when lawmakers are allocating spending with an eye to both the pocketbook and the climate, energy efficiency is always a go-to—filled with what appears to be low-hanging fruit. It’s therefore no surprise that energy efficiency is an important part of the Biden administration’s efforts to boost affordable and sustainable housing through the infrastructure plan.

During the last economic downturn, then-Vice President Biden helped to inject millions into energy efficiency. Funding for the nation’s flagship energy efficiency policy—the Weatherization Assistance Program, which provides funding for changes like furnace replacements, attic and wall insulation, weather stripping, and more—shot up from $450 million in 2009 to nearly $5 billion in the 2011-2012 program year. Yet, studies by both economists and engineers have found that energy savings from the program consistently fall short of expectations.  And, this weatherization program is not an outlier.  Studies of various U.S. efficiency programs, ranging from K-12 schools in California (a study by one of us) to households in Illinois, Michigan, and Wisconsin, found actual savings were between 38 and 63 percent of expected savings.

But we shouldn’t abandon energy efficiency. Instead, we need to improve these programs. This means figuring out what works and what doesn’t, and targeting funding accordingly. The first step is understanding the challenge. Why do energy efficiency programs underdeliver? One of us dug into the details of the Illinois Weatherization Assistance Program and found that 41 percent of the performance gap comes from optimistic projections of the savings.  These projections are based purely on engineering equations, and don’t do enough to take differences between homes and inhabitant behavior into account.  For example, they do not incorporate information on a home’s historical energy use.  This is problematic because these projections are used to decide which energy efficiency upgrades to install.

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Areas of Focus: Energy Markets
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Energy Markets
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
Energy Efficiency
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Energy Efficiency
Improving energy efficiency is lauded as a promising way reduce emissions and lower energy costs. Yet, a robust body of research demonstrates that not all efficiency investments deliver. EPIC faculty...
Making Energy Efficiency Work
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Making Energy Efficiency Work
Funding should be allocated to the energy efficiency programs that are most cost-effective based on independent and rigorous real-world evaluations.