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The Economy-Wide Benefits of Residential Feedback Programs

August 16, 2012 - 1:47pm
By John A. "Skip" Laitner, Visiting Fellow

Advanced utility meters (so-called “smart meters”), coupled with in-home displays or feedback devices, provide the means by which residential energy consumers can become more knowledgeable about their energy consumption practices. Such devices enable consumers to become active managers of their own energy use, or in this case, their home electricity usage patterns. Indeed, one extensive ACEEE meta-review of 57 different feedback programs indicates a 4 to 12 percent range of residential electricity savings on average across an international sample—depending on the technologies employed, the characteristics of the program, and other relevant factors. A more recent ACEEE study found an even wider range, from 0 to 19.5 percent.

At the same time, however, few studies have explored the scale of the market investment potential that might accompany the growth and successful implementation of feedback programs. Nor have they examined the economy-wide benefits that might accrue from the systematic integration of feedback-induced energy savings over time. ACEEE’s new report, with funding support from, provides initial estimates of the larger macroeconomic outcomes of feedback programs. The study, The Economy-Wide Impact of Feedback-Induced Behaviors that Drive Residential Electricity Savings, asks the question: what might the success of these programs imply for the larger economy as a whole?

Depending on the range of assumptions about program effectiveness within individual households, and the overall participation of households across the entire U.S. economy, our new assessment finds feedback programs to be highly cost-effective.  Moreover, the analysis suggests a small but net positive benefit to the nation’s employment levels. From a benefit-cost perspective, the analysis suggests a net savings of $1.60 to $7.70 for every dollar invested in feedback program expenditures and associated technology investments. The likely range is a net savings of $2 to $3 over the period 2012 through 2030. When the variety of program expenditures and efficiency investments are evaluated, together with their net energy bill savings, it appears that feedback programs on the low end might provide an average gain of at least 6,000 net jobs per year over that same period of analysis. Those jobs and associated economic benefits might grow to 56,000 net jobs if feedback programs are implemented at scale.

One final question that might yet be explored is to ask how important are the estimated 4 to 12 percent residential sector savings (or potentially more) from feedback programs—especially as they might compare to other recent estimates of national electricity savings potential from all sectors at some point in the future. One recent ACEEE study on the long-term energy efficiency potential, for example, found a cost-effective electricity savings potential as high as 40 to 50 percent by the year 2050. Based on this simple comparison, we might conclude that it might make sense to move directly to a technology-based policy perspective since it is likely to achieve a multiple from 5 to 25 greater impacts. Alternatively, expanding feedback programs could catalyze a social and cultural shift that can result in even greater efficiency gains that complement other policy mechanisms should we choose to explore that possibility.