Uncertainty and additionality in energy efficiency programs

Residential energy efficiency subsidy programs often suffer from poor additionality. Using a large household-level dataset of energy efficiency subsidy program participation, we find that households are significantly more likely to participate when first moving into an existing home - when uncertainty about energy consumption and savings is greatest. We also find that the influence of bills and dwelling characteristics on participation declines the longer a household has lived in a dwelling. These findings suggest that there is uncertainty about the household -specific benefits of an upgrade that resolves over time. We show that when this is the case, not only are a share of participating households inframarginal (i.e. "non-additional"), many of the "additional"participants may not be economically efficient.