Some empirical findings of an Austrian appliance turn-in program

~

Pergamon

0360-5442(95)00085-2

SOME EMPIRICAL

Energy Vol. 21, No. I, pp. 55-60, 1996 Copyright © 1996 Elsevier Science Ltd Printed in Great Britain. All rights reserved 0360-5442/96 $15.00+0.00

FINDINGS OF AN AUSTRIAN TURN-IN PROGRAM

APPLIANCE

REINHARD HAAS Institute of Energy Economics, Technical University of Vienna, Gusshausstrasse 27-29, A-1040 Vienna, Austria

(Received 14 October 1994; received for publication 11 August 1995)

Abstract--We present the results of an Austrian appliance turn-in program and document major performance features. This program is of interest because it was launched in 1989 and was the first comprehensive rebate program for household appliances in Europe. Although not a state-ofthe-art design, the program provides useful insights and performance data.

INTRODUCTION

Demand-side management programs launched by electric utilities are considered to be a suitable means for enhancing energy efficiency. In the U.S.A., this idea has received strong attention. According to an EPRI report, j in 1992 some 2300 DSM programs were current in the U.S.A. In Europe, DSM has not received such attention. In this paper, we describe the performance of an Austrian appliance tuna-in program for households. It was launched in 1989 by the Austrian electric utilities SAFE and Salzburger Stadtwerke and terminated in 1992.I" The program is of interest for the following reasons: (i) it was the first comprehensive rebate program for household appliances in Europe; (ii) compared to U.S. programs, it had a high participation rate of about 15%; (iii) it provided two incentives, namely, rebates and payments for kWhs saved; (iv) it provided interesting lessons that may prove to be helpful in other areas. In this paper, we analyse the following questions: (i) Have consumers with high or low initial electricity consumption switched to new appliances? (ii) What were the differences in consumption changes for participants and non-participants? (iii) Which type of appliance has saved the most energy? (iv) What was the age of the replaced units in different appliance categories? (v) What were the conservation costs per kWh saved? (vi) What were the long-term increases in service demands, i.e. to what extent did participants switch to larger units? (vii) How great is the rebound effect due to a short-term increase in service demand? (viii) How extensive was free ridership? BACKGROUND OF THE PROGRAM

SAFE and Salzburger Stadtwerke are electric utilities in the Austrian federal state of Salisbury. The SATP addressed residential consumers only. No repeated participation was allowed. The program design allowed turn in of one electric appliance per household of the following types: refrigerators, freezers, electric ranges, dish washers, and clothes washers. The total number of program participants was 24,400 or 15.3% of all households. Detailed data on a control group of 58,000 households were available for program evaluation. As noted, the program allowed investment rebates and payments for kWhs saved. The rebate was the greater value of either 20% of the initial electricity bill or 20% of the cost of the new appliance. The payment per kWh saved was one-half of the electricity price of 2 AS/kWh (1US$ ~ 12AS). This rebate was offered to participants for three years (1990-1992) following the program but was capped at 5% of the initial electricity bill. Receipt of a rebate was subject to the condition that energy consumption of the new unit was at least 25% lower than that of the original unit. During the program, this restriction was changed to allow restricted selection of efficient appliances which had reduced consump-

t i n this paper, we refer to this program as the SATP = Salisbury Appliance Turn-in Program.

tr.~ zl/1.E

55

56

Reinhard Haas

tion of about 20%. At the time of program design in 1988, only limited experience was available in Europe and none of the now common tests (e.g., total resource cost test or rate-impact measure test) were applied for evaluation. METHODOLOGYTO ESTIMATEENERGY SAVINGS The initial energy use per appliance was calculated by using results from an earlier comprehensive Austrian research project on energy use per appliance as a function of appliance age. For the appliances replaced in the SATP, we knew the age distribution and hence could estimate energy use. Because of the large samples for different appliance types, this approach provided good estimates. Following Hirst and Keating, 6 we estimated the electricity savings by monitoring household electricity consumption before and after 1989 when the program was completed. The climate in Salisbury during the years 1988 and 1990 was similar and we therefore did not have to make a climate correction. The number of heating-degree days was 4954 Kd (Kelvin-days) for 1988 and 4959 Kd for 1990. The total saving is the sum of the differences between the yearly electricity consumption of participating households before and after the program; for participants replacing refrigerators, the total savings were 50 kWh/yr. The net savings are defined as the difference between the total savings of participants and non-participants. As an example, because there was an average increase in consumption of 148 kWh/yr per non-participant for people replacing a refrigerator, we obtained net savings of 198 kWh/yr (see Table 3). It is important to note that net savings allow for the rebound effect but do not take into account free riders or free drivers. OVERVIEW OF RESULTS The first question we addressed was whether consumers with high or low initial electricity consumption switched to new appliances? Figure 1 depicts the distribution of program participants and nonparticipants with respect to initial electricity demand and clearly shows that participants had higher initial electricity consumption than non-participants. We next investigated the difference in participation rate by appliance type (see Table 1). Clothes washers had the greatest participation rate (6%) and the greatest number of replaced appliances, whereas dish washers had the smallest (3%). The average age of the replaced appliances was 17 years. The oldest were freezers (average age = 18 years) and the newest were dish washers (14 years).

14" 12

,o.,o

art=cl ants

,n s,

I ,.

"6

0

'

10'00

'

2dO0

'

3dO0

'

dO0

'

5dO0

'

6dO0

'

7dO0

'

8000

Initial o o n s u m p t i o n [kWh/yr] Fig. I. Distributions of initial electricity consumption of SATP program participants and non-participants.

Austrian appliance turn-in

57

program

Table I. Participation rate for different appliances in the SATP (Total of households = 159,000).

Number of units

Number of participants

Participation rate (%)

Average age of replaced units (yr)

Refrigerators Freezers Clothes washers Electric ranges Dish washers

155,820 101,760 125,610 151,050 50,880

5400 4849 7804 4880 1464

3 4 6 3 2

17 18 15 18 14

Total

159,000

24,400

15

17

Appliance

We next examined the changes in consumption for participants and non-participants. As may be seen in Fig. 2, participants had far greater savings than non-participants. ENERGY SAVINGS AND CONSERVATION COST

The major challenge for all conservation programs is correct assessment of savings from the program. These issues have been discussed in detail by Vine, 2 Hirst and Sabo, 3 and Wirl. 4 Table 2 summarizes energy consumption of old and new appliances in Austria. It may be seen that energy consumption by appliances rebated in the SATP and by average new units were closely correlated. Energy consumption was slightly less than for average new units for refrigerators, freezers, and clothes washers, but slightly more for ranges and dish washers (see Table 2, second and fourth columns). This result indicates that there was virtually no rebound effect. We now consider free riders. As Vine s argues, free riders may reduce the success of a program from a utility perspective but not from the point-of-view of society, since the total resource costs of DSM programs are not significantly affected by free riders. The impact of free riders is limited to additional administrative (not incentive) costs of a program. The utility incentives received by free riders represent transfers between the utility and the free rider but do not affect the total resource cost of the measure.

30 ¸

25' oc

- 0 - - Non-Participants I Participants

20.

12.

E =

15

c o

" era u

10

5

Increase in consumption

c

Savings n

-10 1000

2000

3000

4000

5000

6000

7000

Initial electricity consumption per household [kWh/yr] Fig. 2. Percentage changes in consumption for participants and non-participants in the SATP.

8000

Reinhard Haas

58

Table 2. Energy consumption of appliances in kWh/yr for Salisbury and in the SATP.

Appliance Refrigerators Freezers Clothes washers Electric ranges Dish washers

Average old unit in the SATP

Average new unit in 1989 in Austria

Best new unit in 1989 in Austria

Average new unit in the SATP

378 769 223 142 366

182 394 166 108 255

133 230 130 72 218

175 366 165 115 275

Additional utility-administration costs are required in order to run a program for participants who would have adopted conservation measures even in the absence of the program. Therefore, the impact of free riders on the cost of an energy-efficiency program depends on the number of free riders and the magnitude of program administrative costs. Table 3 summarizes yearly electricity consumption of participants and non-participants before and after the SATP by appliance and the corresponding changes in consumption. Clearly, participants who replaced old dish washers had the highest initial consumption, and participants who replaced old refrigerators had the lowest. Furthermore, there were large variations in savings (see Table 3 and Fig. 3). The net savings were 427 kWh/yr for participants who replaced freezers but only 72 kWh/yr for participants who turned in clothes washers. On the other hand, participants who chose to replace dish washers had the highest initial consumption (5309 kWh/yr) but rather low savings (125 kWh/yr). The major reason for the large difference in savings is that the initial consumption of some appliance types was very low so that there was not much energy to be saved. One of the major methods used to assess DSM programs is determining the specific costs per kWh saved. This issue has been thoroughly discussed in recent papers. 7,8 The overall expenses in the SATP were AS 60 million. The detailed structure of program expenses may be seen in Table 4. AS 41 million were spent for rebates, AS 8.6 million for kWhs saved, and AS 10 million for administration specific to program design and implementation, The greatest average rebate was given for electric ranges (AS 2004 per unit), and the smallest for refrigerators (AS 1486 per unit). Specific conservation costs are shown in the last column of Table 4. They varied greatly by appliance type, e.g., conservation costs for electric ranges were five times higher than those for freezers. These costs do not consider free ridership but, due to the ages of replaced appliances, we suspect that many participants would have purchased new appliances (perhaps with lower efficiencies) without a DSM program and, therefore, free ridership would be high. If free ridership had been 50%, conservation costs would be doubled; if it was 90%, costs would be increased ten times. CHANGES IN LONG-RUN SERVICE DEMAND

We were interested in whether participants of the SATP used the program to increase their longterm service demand by purchasing larger units. Figure 4 depicts the share of participants who switched Table 3. Energy demand per household in kWh/yr and change in consumption in kWh/yr associated with the SATP.

Average initial demand per househld

Average final demand per household

Total change in consumption

Net change in consumption

Refrigerators Freezers Clothes washers Electric ranges Dish washers

3680 4544 4205 4313 5309

3630 4265 4281 4387 5332

(-50) (-279) 76 74 23

(-198) (-427) (-72) (-74) (-125)

All participants

3973

3938

(-35)

(-183)

Non-participants

3817

3965

148

Appliance or participants

Austrian appliance turn-in program

II

Dish washer

59

II

Range Clothes w. Freezer Refri

J -1 O0

0

I~ Net Savings

1O0

200 300 Savings [kWh/yr]

i

Total Savings

r"

I

400

Fig. 3. Total savings (sum of the differences between the yearly electricity consumption of participating households before and after the program) and net savings (difference between total savings of participants and nonparticipants) for different appliances in the SATP.

Table 4. Expenses and conservation costs in the SATP for an average life of 15 years and a discount rate of 5%. Average rebate per participant Average annual Administration (AS) bounty (AS/yr) costs (AS)

Appliance Refrigerators Freezers Clothes washers Electric ranges Dish washers

1486 1765 1647 2004 1684

127 195 118 150 126

n.a. n.a. n.a. n.a. n.a.

Average rebate

1703

142

.

Total (Mill.AS)

41.9

8.6

10.0

Total costs (103 AS)

Overall program savings Levelized utility (MWh/yr) cost (AS/kWh)

6869 11,022 15,594 10,773 3019 .

.

1069 2071 562 361 183

0.64 0.53 2.77 2.98 1.65

4246

1.42

.

60.5

100% 75~

~, 50% 25~ 0% Refrigerator

Freezer

Clothes washer Electric range Dish washer

I I~MmSmaller ~

Same ~

Larger 1

Fig. 4. Share of participants who switched to smaller/the same/larger units in the SATP by appliance.

60

Reinhard Haas

tO larger units, units of the same size or smaller ones for different appliances. We found that more participants switched to larger than to smaller units while around 70% of the participants did not change their size category. CONCLUSIONS Our major results are: (i) there was a clear difference in savings between participants and nonparticipants. Participants had average total savings of 35 kWh/yr while non-participants had an increase in average consumption of 148 kWh/yr. (ii) The difference in net savings due to the type of replaced appliance was significant. Savings varied from 427 kWh/yr for freezers to 72 kWh/yr for clothes washers. (iii) The difference in savings by appliance type corresponded to our engineering estimates. This result provides evidence that the rebound effect was small, (iv) Conservation costs varied greatly among different appliance types, e.g., they were five times higher for electric ranges than for freezers. The average cost per kWh saved without considering free ridership was AS 1.42 per kWh.

Acknowledgements--I am grateful to E. Vine and F. Wirl for valuable discussions and comments and to C. Reiter for his support in evaluating the data. REFERENCES 1. EPRI, "1992 Survey of Utility Demand-side Management Programs," Electric Power Research Institute, Palo Alto, CA (1993). 2. E.L. Vine, Energy--The International Journal 17, 1073 (1992). 3. E. Hirst and C. Sabo, Energy--The International Journal 17, 635 (1992). 4. F. Wirl, Energy Systems Policy 13, 285 (1989). 5. E.L. Vine, Energy--The International Journal 17, 919, (1992). 6. E. Hirst and K. Keating, Energy Systems Policy 10, 257 (1987). 7. P.L. Joskow and D.B. Marron, Energy J. 13, 41 (1992). 8. F. Wirl, Energy Econ. 16, 46 (1994).