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Stated Preferences for Space Heating Investment

Elena Stolyarova, Hélène Le Cadre, MINES ParisTech, PSL Research University, Centre for Applied Mathematics, Dominique Osso, EDF R&D, ENERgie dans les BAtiments et les Territoires and Benoit Allibe

No 8579, EcoMod2015 from EcoMod

Abstract: this paper, we use a discrete choice experiment on space heating for both detached houses and apartments in France. In our choice experiment, we asked 1,820 respondents, both owners and tenants, to imagine that their current space heating system had broken down and that they had to choose a new one to replace it. A multinomial logit model was used to analyze the households preferences and willingness to pay for various space heating system attributes. We found that in general households prefer renewable sources and systems, but avoid wood. Preferences for familiar technologies have a considerable impact on the probabilities of choice and could represent a significant obstacle to the development of energy-ecient equipment. Willingness to pay for attributes that control energy consumption depends on thermal comfort preferences. The more cold-sensitive the household, the more willing it is to invest to renewable energy sources and to set temperature management. At the first time we modeling the household utility function derived from thermal comfort (annual space heating service) which is a strictly increasing and concave function of indoor temperature. The households can obtain additional utility from energy efficiency after the dwelling renovation. This renovation allows not only to reach the thermal comfort at least cost, but also to enjoy the advantages of new installation as a brand, type of heating system, internal or external solid wall insulation, type of heat emitters, energy source (natural gas, electricity, wood, etc.), control system to manage set temperature of space heating, etc. The utility, derived from retrofit works, is a function of purchase attributes and constant over time. The households choose the level of indoor temperature and decide to invest in retrofit works in order to maximize their utility, subject to available income which is sufficient to cover energy bills. We use annual degree heating days, function of indoor temperature, to calculate energy bills. Household and firm are supposed to be risk averse. In order to analyze household preferences for energy efficiency works, we adapt the econometric approach based on the Random Utility Model (RUM), also known as discrete choice analysis. The random utility function is decomposed in two parts. One is observable by the researcher and can be estimated, the other one is considered to be random. The RUM allows us to obtain the probability to invest in different retrofit works. Data At the beginning of January 2015 a sample of 2000 respondents is collected by internet from a panel of 600,000 French Households. The survey consists of two parts (revealed preferences data and two choice experiments) and contains questions about socio-economic and demographic information, dwelling conditions, energy attitudes, space heating system and thermal comfort. We uses a balancing orthogonal fractional factorial design with main effects only to design the choice experiments. In the first choice experiment, the respondent must take a choice between three offers of space heating systems in order to replace the old system which is broken down. The offers are characterized by the following attributes: investment cost, expected energy-savings potential, energy used, type of space heating system, guarantee period, control system to manage set temperature, financial grant and bank loan. In the second choice experiment, we propose to improve energy efficiency of respondent’s dwelling. The respondent must choose between three offers: install new space heating system, insulate walls and roof, to do both. Or the respondent can decide do not invest in retrofits works. The offers’ attributes are the same as in first choice situation. We expect that the study will provide us the information about different thermal comfort profile of French households (most preferred indoor temperature, causes of discomfort). The choices situations will used to find the willingness to pay and reservation prices for energy efficiency works. The program of contract between household and firm will allow us to understand French renovation market and propose some solutions to increase the energy efficiency works, the market share of renewable and environmental friendliness equipment.

Keywords: France; Energy and environmental policy; Microsimulation models (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-ene and nep-upt
Date: 2015-07-01
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