@article{212ab41d70b44a3f86d53ba3c2b983ea,
title = "DECOMPOSING THE WEDGE BETWEEN PROJECTED AND REALIZED RETURNS IN ENERGY EFFICIENCY PROGRAMS",
abstract = "Evaluations of energy efficiency programs reveal that realized savings consistently fall short of projections. We decompose this “perfor-mance wedge” using data from the Illinois Home Weatherization Assistance Program (IHWAP) and a machine learning-based event study research de-sign. We find that bias in engineering models can account for up to 41% of the wedge, primarily from overestimated savings in wall insulation. Hetero-geneity in workmanship can also account for a large fraction (43%) of the wedge, while the rebound effect can explain only 6%. We find substantial heterogeneity in energy-related benefits from IHWAP projects, suggesting opportunities for better targeting of investments.",
author = "Peter Christensen and Paul Francisco and Erica Myers and Mateus Souza",
note = "We are grateful for the generous support from the Alfred P. Sloan Foundation. Thanks to Mick Prince and Chad Wolfe from the Illinois Department of Commerce & Economic Opportunity, without whom this research would not be possible. We also thank Bryan Parthum and others from the University of Illinois{\textquoteright}s Big Data and Environmental Economics and Policy (BDEEP) group for outstanding research assistance. We are grateful to Stacy Gloss and the Indoor Climate Research & Training center for liaison with state officials and utility providers. Souza is also thankful for the financial support from CAPES (Coordination for the Improvement of Higher Education Personnel–Brazil). Finally, we acknowledge the excellent feedback and comments from Josh Blonz, Judson Boomhower, Meredith Fowlie, Chris Knittel, Dave Rapson, Sam Stolper, Catherine Wolfram, and seminar participants at the UC Berkeley Energy Institute, the Midwest Energy Fest, the Heartland Workshop in Environmental and Resource Economics, Camp Resources, the Association of Environmental and Resource Economists{\textquoteright} Summer Meeting, the Berkeley Power Conference, and the NBER Summer Institute. All errors are our own. We are grateful for the generous support from the Alfred P. Sloan Foun-dation. Thanks to Mick Prince and Chad Wolfe from the Illinois Depart-ment of Commerce & Economic Opportunity, without whom this research would not be possible.",
year = "2023",
month = jul,
doi = "10.1162/rest_a_01087",
language = "English (US)",
volume = "105",
pages = "798--817",
journal = "Review of Economics and Statistics",
issn = "0034-6535",
publisher = "MIT Press Journals",
number = "4",
}