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Understanding the risk perception of energy efficiency investments: Investment perspective vs. energy bill perspective

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  • Rockstuhl, Sebastian
  • Wenninger, Simon
  • Wiethe, Christian
  • Häckel, Björn

Abstract

Promoting energy efficiency is an important element of environmentally friendly energy policy and necessary to avert climate change. In this context, understanding the investment decision-making of individuals is important to develop and implement effective policy instruments. Literature analyzing decision-making of energy efficiency investments and especially the influence of connected risk finishes with two different conclusions, i.e., analyzes risk from two different perspectives. First, studies within the investment perspective describe investment risk, caused by volatile future energy bill savings, as a key barrier for energy efficiency investments. Second, studies within the energy bill perspective argue that energy efficiency is reducing energy price exposure and the resulting decrease of overall risk is described as investment promoting. This dichotomy in risk perception is the focus of our study. With the help of a theoretical model as well as a case study based on real-world data of the German retrofitting market, we analyze how the contrary perspectives influence expected utility, i.e., decision-making. Thereby, we find that decision-makers invest more in energy efficiency when evaluating from the energy bill perspective and derive important implications for environmentally friendly energy policymaking.

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  • Rockstuhl, Sebastian & Wenninger, Simon & Wiethe, Christian & Häckel, Björn, 2021. "Understanding the risk perception of energy efficiency investments: Investment perspective vs. energy bill perspective," Energy Policy, Elsevier, vol. 159(C).
    • Handle: RePEc:eee:enepol:v:159:y:2021:i:c:s0301421521004821
    DOI: 10.1016/j.enpol.2021.112616
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    5. Haomiao Zhai & Fan Yang & Fuxia Gao & Stavros Sindakis & Gazal Showkat, 2024. "Digital Transformation and Over-Investment: Exploring the Role of Rational Decision-Making and Resource Surplus in the Knowledge Economy," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 14103-14134, September.
    6. Xia, Hui & Dai, Ling & Sun, Liping & Chen, Xi & Li, Yuening & Zheng, Yihan & Peng, Yanlai & Wu, Kaiya, 2023. "Analysis of the spatiotemporal distribution pattern and driving factors of renewable energy power generation in China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 414-428.
    7. Muhammad Waqas Rana & Sufang Zhang & Shahid Ali & Iqra Hamid, 2022. "Investigating Green Financing Factors to Entice Private Sector Investment in Renewables via Digital Media: Energy Efficiency and Sustainable Development in the Post-COVID-19 Era," Sustainability, MDPI, vol. 14(20), pages 1-19, October.
    8. Simon Wenninger & Christian Wiethe, 2022. "The Human’s Comfort Mystery—Supporting Energy Transition with Light-Color Dimmable Room Lighting," Sustainability, MDPI, vol. 14(4), pages 1-10, February.
    9. Britto, Anthony & Dehler-Holland, Joris & Fichtner, Wolf, 2022. "Wealth, consumption, and energy-efficiency investments," Working Paper Series in Production and Energy 67, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
    10. Mehdi Bensouda & Mimoun Benali, 2022. "Overcoming Risk Aversion Regarding Energy Efficiency Practices through Mimetic Pressure and Financial Slack: Findings from the Moroccan Manufacturing Sector," Sustainability, MDPI, vol. 14(23), pages 1-15, December.
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