Economic impacts from energy efficiency programs –Variations in multiplier effects by program type and region

John Gardner, Skumatz Economic Research Associates, Inc., USA
Lisa Skumatz, Ph.D., Skumatz Economic Research Associates, Inc., USA

Keywords

economic impacts, NEBs, non-energy benefits, economic development, sustainability

Abstract

Research indicates that the value of omitted program effects – specifically non-energy benefits (NEBs) – represent a significant share of overall program impacts. One of the largest components of societal benefits is the direct and indirect economic and job creation effects stimulated by the investment in conservation on behalf of the program. The literature has indicated that the valuations assigned to this category of these categories can be large, but much of the literature overstates the impact of economic NEBs. We conducted extensive research to develop reliable and defensible estimates of these benefits categories. This study used input-output analysis to update the economic multipliers for NEBs in several ways.

Net: Developed “net” estimates of the multipliers (rather than “gross” factors)
Variations by Region: Estimated multipliers for multiple states and for the entire US;
Variations by Program Type: Developed estimates based on different types or categories of programs (e.g weatherization vs. new construction vs. appliance programs, etc.),
Variations in Baseline Assumptions: Different assumptions about where the expenditures are transferred “from” for the net analysis (e.g. from “generation”, from a mixed market basket, etc.); and
Variations over Time: Used data from multiple time periods to examine changes in the size of multipliers over time.

We examined the results by state, by program type, and over time and found dramatic differences in the economic impacts by program type and territory under consideration. The results provide estimates of the economic impacts derived from the program; however, for communities or utilities with economic development goals, the results can be used to help select between program alternatives. The results are new, and the revised figures have been used to compute more reliable and tailored estimates of economic non-energy benefits that can be applied in regulatory tests.