Assessing the effectiveness of energy efficiency measures in the residential sector gas consumption through dynamic treatment effects: Evidence from England and Wales

Abstract

Improving energy efficiency (EE) is vital to ensure a sustainable, affordable, and secure energy system. The residential sector represents, on average, 18.6% of the total final energy consumption in the OECD countries in 2018, reaching 29.5% in the UK (IEA, 2020a). Using a staggered differences-in-differences approach with dynamic treatment effects, we analyse changes in residential gas consumption five years before and after the adoption of energy efficiency measures. The analysis includes energy efficiency interventions involving the installation of new heating-related insulation equipment—i.e., of loft insulation and cavity walls, supported by energy efficiency programmes in England and Wales between 2005 and 2017—using a panel of 55,154 households from the National Energy Efficiency Data-Framework (NEED). We control for, among other factors, energy prices and the extent to which gas consumption changes are dependent on household characteristics and variations in weather conditions. Our results indicate that the adoption of EE measures is associated with significant reductions in household residential gas consumption one year after their implementation. However, the effect does not last in the long run and energy savings disappear four years after the retrofitting of cavity wall insulation measures and after two years following the installation of loft insulation. The disappearance of energy savings in the longer run could be explained by the energy performance gap, the rebound effect and/or by concurrent residential construction projects and renovations associated with increases in energy consumption. Notably, for households in deprived areas, the installation of these efficiency measures does not deliver energy savings. These results confirm the existence of effects that reduce the energy savings from the adoption of these efficiency technologies over time and indicates that, for some groups, these net savings do not seem to materialize.