Energy Efficient Lighting: Consumer Preferences, Choices, and System Wide Effects

Lighting accounts for nearly 20% of overall U.S. electricity consumption, 14% of U.S. residential electricity consumption, and 6% of total U.S. carbon dioxide equivalent (CO2e) emissions. A transition to alternative energy-efficient technologies could reduce this energy consumption considerably. We studied three questions related to energy efficiency lighting choices and consequences, which are: • Question 1: How large is the system-wide effect of a residential lighting retrofit with more efficient lighting technologies? • Question 2: Based on stated preference (SP) data, which factors influence consumer choices for general service light bulbs? What is the effect of the new lighting efficiency label mandated by the Federal Trade Commission? • Question 3: What can we learn about market trends and consumer choices from consumer panel data (i.e. revealed preference (RP) data) for general service light bulbs between 2004 and 2009? How can we compare the findings from SP and RP data, and which findings are robust across the two? In Chapter 2, we focus on the issue of lighting heat replacement effects. The issue is as follows: lighting efficiency goals have been emphasized in various U.S. energy efficiency policies. However, incandescent bulbs release up to 95% of input energy as heat, and it has been argued that replacing them with more efficient alternatives has a side effect in the overall building energy consumption: it increases the heating service that needs to be provided by the heating systems and decreases the cooling service that needs to be provided by the cooling systems. We investigate the net energy consumption, CO2e emissions, and saving in energy bills for single family detached houses across the U.S. as one moves towards more efficient lighting systems. In some regions, these heating and cooling effects from more efficient lighting can undermine up to 40% of originally intended primary energy savings, erode anticipated carbon savings completely, and lead to 30% less household monetary savings than intended. However, this overall effect is at most one percent of total emissions or energy consumption by a house. The size of the effect depends on various regional factors such as climate, electricity fuel mix, differences in emission factors of main energy sources used for heating and cooling, and electricity prices. Other tested factors such as building orientation, insulation level, occupancy scenario, or day length do not significantly affect the results. Then, in Chapter 3, we focus on factors that drive consumer choices for light bulbs. We collected stated preference data from a choice-based conjoint field experiment with 183 participants. We estimate discrete choice models from the data and find that politically liberal consumers have a stronger preference for compact fluorescent lighting technology and for low energy consumption. Greater willingness-to-pay for lower energy consumption and longer life is observed in conditions where estimated operating cost information was provided. Providing estimated annual cost information to consumers reduces their implicit discount rate by a factor of five, lowering barriers to adoption of energy efficient alternatives with higher up-front costs; however, even with cost information provided, consumers continue to use implicit discount rates of around 100%, which is larger than that estimated for other energy technologies. Finally, we complemented the stated preference study with a revealed preference study. This is because stated preference data alone have limitations in explaining consumer choices, as purchases are affected by many other factors that are outside of the experimenter control. We investigate consumer preferences for lighting technology based on revealed preference data between 2004 and 2009. We assess the trends in lighting sales for different lighting technologies across the country, and by store type. We find that, across the period between 2004 and 2009, sales of all general service light bulbs are almost monotonically decreasing, while CFL sales peaked in 2007. Thanks to increasing adoption of CFLs during the period, newly purchased light bulbs contributed to lowering carbon emissions and electricity consumption, while not sacrificing total produced lumens as much. We study consumer preferences for real light bulbs by estimating choice models, from which we estimate willingness-to-pay (WTP) for light bulb attributes (watt and type) and implicit discount rates (IDR) consumers adopt for their purchases. We find that the campaign for efficient bulbs in Wal-Mart in 2007 is potentially related to the peak in CFL adoption in 2007 in addition to the effects of the EISA or other factors/programs around the same period. Consumers are willing to pay, $1.84 more for a change from an incandescent bulb to a CFL and -$0.06 for 10W increase, the values which also include willingness-to-pays for corresponding changes in unobserved variables such as life and color. IDRs for four representative states range between around 230% and 330%, which is in a similar range we estimate from the choice experiment. Overall, even with energy efficiency labels, nationwide promotion of CFLs by retailers, or better availability of CFLs in the transforming residential lighting market, we see the barriers to energy efficient residential lighting are still persistent, which are reflected in high implicit discount rates observed from the models. While we can expect the EISA to be effective in lowering the barriers through regulation, it alone will not close energy efficiency gap in the residential lighting sector.