In most of the existing economics energy models it is generally assumed that energy consumers behave in an economically rational way. However, empirical data show that consumers are rather 'bounded rational', because of effects such as split preferences, perceived financial barriers, lack of knowledge/ information, or the implicit costs of the transaction. The different energy efficiency policies implemented in the EU try to remove the different financial and non-financial barriers to incentive energy consumers to invest in cost-effective energy efficiency technologies.
Empirical research is needed to better understand consumer's decision making to improve the design of future energy efficiency policies in such a way that existing barriers can be removed, to better reflect the behaviour of consumers in energy models and also to better reflect the impact of energy efficiency policies on the different consumers' decision making processes in energy models.Scope:
Proposal should advance the current knowledge on how the different consumer groups make their energy efficiency investment decisions and how energy efficiency policies can have an impact on financial and non-financial barriers in the decision making process making use of market data, large sample-surveys and other empirical sources in addition to a theoretical analysis. As different factors influence the individual choice of consumers the empirical analysis needs to be done for all consumer groups. For households there might be differences dependent on the income level, age, education, gender, tenant/landlord etc. that should be better investigated. In addition, there might be also a geographical differentiation of consumers with regard to energy efficiency investments. The decision of other consumer groups invest in energy efficiency, like companies in the service sector, in agriculture or in industry might be influenced by other factors.
In addition, research should also investigate the differentiation between possible energy efficiency investments which are influenced by different factors, e.g. decisions to invest in the renovation of buildings have a different time horizon than investments in energy efficient products (washing machine, TV etc.). Such analysis should also take into account country-specific factors.
Discount rates are used in many energy models to reflect the inter-temporal decision making of consumers and to describe the economic actor's behaviour. To improve energy models the results should be based on robust empirical data to apply appropriate discount rates or other parameters to support the analysis and development of energy efficiency related policy strategies. Proposals should visualise their research results and include tailored communication activities to clearly defined target groups. Where appropriate, they should take gender issues into account. Proposals should fill knowledge gaps not yet covered by former or ongoing research projects and take into account existing macro- and microeconomic models and results of socio-economic sciences and humanities. The Commission considers that proposals requesting a contribution from the EU of between EUR 1 and 1.5 million would allow this specific challenge to be addressed appropriately. Nonetheless, this does not preclude submission and selection of proposals requesting other amounts.Expected Impact:
Proposed actions are expected to improve the current methodologies and empirical base used to quantify the positive impacts of energy efficiency policy and to improve the evidence-base for a better development of future energy efficiency policies and energy models, evidenced for example by the number of public officers and other stakeholders influenced or references to impact assessments, strategy papers or other policy documents.