Energy efficiency improvements are often lauded by lawmakers for being win-win-win investments: cutting down energy, and therefore pollution, carbon emissions, and money. But a new study analyzing the take-up rate of one federally funded retrofit program finds the significant burdens involved in applying for and installing energy efficiency upgrades are preventing households from taking advantage of these cost-saving measures, even when they do not require any out of pocket expenses. The study provided substantial enrollment assistance to a subset of randomly selected households. This assistance modestly increased the fraction of households going through with the upgrades, but even among the group receiving assistance more than 9 in 10 households opted not to get them.

“The vast majority of low-income households, who need these energy savings the most, are choosing not to get the upgrades,” says Michael Greenstone, the director of the Energy Policy Institute at the University of Chicago and an author of the study. “This is especially striking because the upgrades are free and we provided extraordinary levels of assistance to help households apply for the program. Our interpretation is that the residential energy efficiency investments entail substantial non-monetary costs, and while these results are about low-income households, they may shed light on the disappointing rates of energy efficiency investment in the broader population.”

Greenstone and his coauthors, Meredith Fowlie and Catherine Wolfram from the University of California-Berkeley, looked specifically at the Federal Weatherization Assistance Program (WAP). The program, which received a substantial boost in funding from the 2009 American Recovery and Reinvestment Act, aims to reduce the energy burden of low-income Americans by installing energy efficiency measures in their homes. Participating households receive a free energy audit and a home retrofit such as insulation or window replacements – saving about $5,000 in upgrades for their home that are designed to reduce their monthly electricity and natural gas bills.

“Despite the fact that the upgrades were free, we noticed that participation in the program was very low,” says Wolfram. “We were surprised that households are not taking advantage of a free program when it would save them so much in their electric bills.”

In an extensive field study of eligible low-income households, the researchers and their staff got the word out about the program by knocking on doors, placing personal phone calls, launching “robo-calls” and mailing thousands of post cards. Once a household signaled interest, the staff would schedule a meeting to assist with the application materials, which included extensive paperwork documenting their eligibility (utility bills, earnings documentation, social security numbers and deeds to the home).

Of those encouraged by the researchers to apply, less than 15 percent actually applied (compared to only 2 percent who were not encouraged). Once they applied, only about 6 percent of those encouraged to apply went through with the upgrades (compared to less than one percent).

“Households had to take the time to learn about the program and how to apply, gather the paperwork, meet with contractors, and endure the hassle of having a construction team working in their home,” says Fowlie. “This is a lot to expect from people who generally just don’t have the time. It seems that these hassle and effort costs exceeded the expected benefits from weatherization for a majority of households.”

The researchers are part of The E2e Project, which is dedicated to studying the effectiveness of energy efficiency programs. E2e is a joint initiative of the University of California at Berkeley, University of Chicago, and Massachusetts Institute of Technology.

Read the full study here.

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...
Definition
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.