Low rates of free-riding in residential energy efficiency retrofit grants. ESRI Research Bulletin, 2018/04

Collins, Matthew and Curtis, John (2018) Low rates of free-riding in residential energy efficiency retrofit grants. ESRI Research Bulletin, 2018/04. UNSPECIFIED.

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Abstract

The Sustainable Energy Authority of Ireland (SEAI) administers the Better Energy Homes (BEH) grant scheme to encourage households to invest in residential energy efficiency retrofits. All grant schemes are subject to free-riders, where a proportion of those being grant-aided would have undertaken the activity (i.e. energy efficiency retrofits) in the absence of any grant aid, which is often referred to as deadweight loss. This research finds that just 7% of participants in the BEH scheme would have undertaken a retrofit even in the absence of grant aid, and a further 8% would have occurred with a lower level of grant aid than was available. These free-rider rates are very low compared to similar schemes internationally, which have free-riding rates ranging from 40% to as much as 96%. Free-rider rates vary by retrofit type, lowest for households investing in solar panels and highest for those investing in central heating controls. Of households that received grant aid for heating controls only, 33% were estimated as free riders (i.e. would have invested in absence of the grant) and a further 27% would have undertaken a retrofit with a lower level of grant aid. The analysis also estimates how much households are willing to pay for certain types of energy efficiency retrofit improvements. For retrofits that specifically improve the efficiency of energy used for space and water heating (e.g. boiler upgrades, heating controls) estimated willingness-to-pay equals €0.127/kWh/yr. Households that have previously undertaken an energy efficiency upgrade are willing to pay twice this amount. Additionally, households in the least energy efficient properties (i.e. properties with the greatest potential energy efficiency gains) are willing to pay less for retrofits than households in more energy efficient properties.

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