When it comes to investing in energy efficiency (insulation, purchase of energy saving electric devices...), households wonder what will be the future value of their investment. Discount rates are applied to evaluate it, and depend on equipment lifetime, or investment risk.
Since households` willingness to wait or to take risks varies, these discount rates differ across households. Discount rates are key parameters in energy-economic models used by public authorities in designing and evaluating efficiency policies.
Which discount rates should be used to adequately portray household`s time and risk preferences in energy efficiency investments? This question is the core issue of the European project BRISKEE.
Objectives of the project are:
To provide evidence-based input to energy efficiency policy design and evaluation, thereby supporting the market uptake of energy efficiency technologies in the EU residential sector. It contributes to the work programme by addressing the interrelations between microeconomic factors, sectoral energy demand and macroeconomic effects, relying on a consistent methodological framework implemented in 5 work packages:
Provide empirical evidence for the magnitudes of discount rates accounting for differences across households, technologies and countries, and assess their effects on the diffusion of efficiency technologies in the EU (micro-level). A multi-country survey (1000 interviews per country) will be carried out and analyzed econometrically.
- Explore the impact of time discounting and risk preferences (and of policies affecting those factors) on the diffusion of energy efficient technology and energy demand in the EU residential sector until 2030 (meso-level). Established bottom-up vintage stock models will be employed for appliances (FORECAST-Residential) and for buildings (Invert/EE-Lab).
- Explore the macro-level impacts of changes in microeconomic decision-making and of energy efficiency policy on employment, GDP and exports in the EU until 2030. This involves simulations with an established macro-economic model for the EU (ASTRA).
- Provide evidence-based recommendations for key energy efficiency policies and input for impact assessments and policy analysis at the three levels of analysis.
- Communicate and disseminate empirical findings to policy makers, national experts, the research community and the general public.
This project is funded by the research program Horizon 2020 up to one million of Euros, and will provide recommendations to the European Union by September 2017, for future energy efficiency policies and policy evaluation.
During 30 months, starting in March 2015, the project team, under the lead of Fraunhofer Institute for Systems & Innovation Research (ISI), will conduct empirical studies across 8 to 10 EU member states.