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Program evaluation and incentives for administrators of energy-efficiency programs: Can evaluation solve the principal/agent problem?

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  • Blumstein, Carl

Abstract

This paper addresses the nexus between evaluation of energy-efficiency programs and incentive payments based on performance for program administrators in California. The paper describes the problems that arise when evaluators are asked to measure program performance by answering the counterfactual question--what would have happened in the absence of the program? Then the paper examines some ways of addressing these problems. Key conclusions are (1) program evaluation cannot precisely and accurately determine the counterfactual, there will always be substantial uncertainty, (2) given the current state of knowledge, the decision to tie all incentives to program outcomes is misguided, and (3) incentive programs should be regularly reviewed and revised so that they can be adapted to new conditions.

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  • Blumstein, Carl, 2010. "Program evaluation and incentives for administrators of energy-efficiency programs: Can evaluation solve the principal/agent problem?," Energy Policy, Elsevier, vol. 38(10), pages 6232-6239, October.
    • Handle: RePEc:eee:enepol:v:38:y:2010:i:10:p:6232-6239
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    1. Eto, Joseph & Stoft, Steven & Belden, Timothy, 1997. "The theory and practice of decoupling utility revenues from sales," Utilities Policy, Elsevier, vol. 6(1), pages 43-55, March.
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    Cited by:

    1. Satchwell, Andrew & Cappers, Peter & Goldman, Charles, 2011. "Carrots and sticks: A comprehensive business model for the successful achievement of energy efficiency resource standards," Utilities Policy, Elsevier, vol. 19(4), pages 218-225.
    2. Mahlia, T.M.I. & Tohno, S. & Tezuka, T., 2013. "International experience on incentive program in support of fuel economy standards and labelling for motor vehicle: A comprehensive review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 18-33.
    3. Liang, Xin & Yu, Tao & Hong, Jingke & Shen, Geoffrey Qiping, 2019. "Making incentive policies more effective: An agent-based model for energy-efficiency retrofit in China," Energy Policy, Elsevier, vol. 126(C), pages 177-189.
    4. Cattaneo, Cristina, 2018. "Internal and External Barriers to Energy Efficiency: Made-to-Measure Policy Interventions," CSI: Climate and Sustainable Innovation 269536, Fondazione Eni Enrico Mattei (FEEM).
    5. Elaheh Jafarnejad & Ahmad Makui & Ashkan Hafezalkotob & Amir Aghsami, 2024. "Governance intervention policies in the production competition of biofuels and fossil fuels: a pathway to sustainable development," Operations Management Research, Springer, vol. 17(2), pages 660-682, June.
    6. Safarzadeh, Soroush & Rasti-Barzoki, Morteza & Hejazi, Seyed Reza, 2020. "A review of optimal energy policy instruments on industrial energy efficiency programs, rebound effects, and government policies," Energy Policy, Elsevier, vol. 139(C).
    7. Olsthoorn, Mark & Schleich, Joachim & Gassmann, Xavier & Faure, Corinne, 2017. "Free riding and rebates for residential energy efficiency upgrades: A multi-country contingent valuation experiment," Energy Economics, Elsevier, vol. 68(S1), pages 33-44.
    8. Chandrashekeran, Sangeetha & Zuckerman, Julia & Deason, Jeff, 2015. "Raising the stakes for energy efficiency: A qualitative case study of California's risk/reward incentive mechanism," Utilities Policy, Elsevier, vol. 36(C), pages 79-90.
    9. Safarzadeh, Soroush & Rasti-Barzoki, Morteza, 2019. "A game theoretic approach for pricing policies in a duopolistic supply chain considering energy productivity, industrial rebound effect, and government policies," Energy, Elsevier, vol. 167(C), pages 92-105.
    10. Cattaneo, Cristina, 2018. "Internal and External Barriers to Energy Efficiency: Made-to-Measure Policy Interventions," CSI: Climate and Sustainable Innovation 269536, Fondazione Eni Enrico Mattei (FEEM).
    11. Zaman, Hosain & Zaccour, Georges, 2020. "Vehicle scrappage incentives to accelerate the replacement decision of heterogeneous consumers," Omega, Elsevier, vol. 91(C).
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    13. Osorio, Karim & Sauma, Enzo, 2015. "Incentive mechanisms to promote energy efficiency programs in power distribution companies," Energy Economics, Elsevier, vol. 49(C), pages 336-349.

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