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Preferences for Energy Retrofit Investments Among Low-income Renters

Hendrik Schmitz and Reinhard Madlener ()

No 8/2021, FCN Working Papers from E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)

Abstract: Energy poverty research has received increased attention in the energy economics literature in recent years. We analyze the preferences of low-income renters in the city of Graz, Austria, for different energy retrofitting options. Using data collected from a Discrete Choice Experiment, we find that households are willing to forego significant future energy cost savings in order to avoid investment costs in the present. This can be caused by several factors, including liquidity constraints, a short investment horizon, and myopia among the participants. Furthermore, participants show a significant Willingness to Pay for the reduction of CO2 emissions. We also present simulations for different forms of subsidies for retrofitting and their effects on market shares and emissions. The results have important policy implications regarding the optimal subsidy policies, in particular for low-income households. Specifically, policy makers should focus on reducing the investment burden for liquidity-constrained renters and inducing a longer investment horizon.

Keywords: Energy Poverty; Discrete Choice Modeling; Residential Energy Consumption; Landlord-Tenant Problem (search for similar items in EconPapers)
JEL-codes: C35 D12 Q48 Q51 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2021-09
New Economics Papers: this item is included in nep-dcm and nep-ene
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