Many consumers have monetary or environmental motivations for saving energy. Indeed, saving energy produces both monetary benefits, by reducing energy bills, and environmental benefits, by reducing carbon footprints. We examined how consumers' willingness and reasons to enroll in energy-savings programs are affected by whether advertisements emphasize monetary benefits, environmental benefits, or both. From a normative perspective, having 2 noteworthy kinds of benefit should not decrease a program's attractiveness. In contrast, psychological research suggests that adding external incentives to an intrinsically motivating task may backfire. To date, however, it remains unclear whether this is the case when both extrinsic and intrinsic motivations are inherent to the task, as with energy savings, and whether removing explicit mention of extrinsic motivation will reduce its importance. We found that emphasizing a program's monetary benefits reduced participants' willingness to enroll. In addition, participants' explanations about enrollment revealed less attention to environmental concerns when programs emphasized monetary savings, even when environmental savings were also emphasized. We found equal attention to monetary motivations in all conditions, revealing an asymmetric attention to monetary and environmental motives. These results also provide practical guidance regarding the positioning of energy-saving programs: emphasize intrinsic benefits; the extrinsic ones may speak for themselves.

Security through the Center for Risk and Economic Analysis of Terrorism Events (CREATE) under grant number N00014-05-0630. However, any opinions, findings, and conclusions or recommendations in this document are those of the authors and do not necessarily reflect views of the United States Department of Homeland Security.

Real-time pricing of electricity is theoretically more economically efficient than flat rate pricing. However, a switch from flat-rates to real-time rates means that many consumers will lose the cross-subsidy they are receiving under the flat rate, and may see an increase in their bills even if they have elastic demand. We use hourly load data from 1260 Commonwealth Edison residential customers on a standard flat rate electricity tariff from 2007 and 2008. We calculate which customers would have been better off and which customers would not Under real time pricing with both elastic and inelastic demand and look at the general characteristics of these customers. We find that if customers do not respond to prices under RTP, then only 35% of customers save money, while the remainder loses. The greatest potential for savings is from reduction in capacity costs.

Turbocharged direct injection (TDI) diesel and hybridized electric gasoline (HEV) vehicles provide higher fuel economy, but have higher manufacturing costs and sell at higher prices than conventional gasoline vehicles. All other attributes being equal, rational consumers expect to recover this price premium in fuel savings over the vehicle lifetime. Since many owners sell their vehicle after three to five years, resale prices should also reflect fuel savings. Here, we employ data from used vehicle auctions in 2008–2009 for paired alternative and conventional vehicles to compare the difference in resale prices to the expected fuel savings and the five-year cost of ownership expressed as the net present value (NPV). To estimate resale prices,we group the auction data by season and by year. We then correct for accumulated odometer mileage, which accounts for most of the variability in prices. At five years, higher fuel economy vehicles retain a higher proportion of their initial price than conventional options. The ratio of the resale value to the initial purchase price increases at higher fuel prices. For the paired HEV – conventional passenger vehicles, the difference in resale prices approximates the expected future fuel savings. The price difference for TDI diesel–gasoline pairs exceeds the fuel savings; other attributes such as performance or prestige may account for this difference. Regardless of the mechanism, the fuel savings and higher resale values compensate for the price premium for the TDI diesel and HEV options.

America seems to have decided that a "smart grid" is what we need to solve the problems of our electric power system. But, what exactly is a "smart grid"? The answer is that it is many different things. Some of the things that get talked about are relatively inexpensive and can go a long way toward solving key problems. Others will likely be very expensive, and at this stage may better be left to the realm of research.

There is growing interest in reducing energy use and emissions of carbon dioxide from the residential sector by deploying cost-effectiveness energy efficiency measures. However, there is still large uncertainty about the magnitude of the reductions that could be achieved by pursuing different energy efficiency measures across the nation. Using detailed estimates of the current inventory and performance of major appliances in U.S. homes, we model the cost, energy, and CO2 emissions reduction if they were replaced with alternatives that consume less energy or emit less CO2. We explore trade-offs between reducing CO2, reducing primary or final energy, or electricity consumption. We explore switching between electricity and direct fuel use, and among fuels. The trade-offs between different energy efficiency policy goals, as well as the environmental metrics used, are important but have been largely unexplored by previous energy modelers and policy-makers. We find that overnight replacement of the full stock of major residential appliances sets an upper bound of just over 710 × 10(6) tonnes/year of CO2 or a 56% reduction from baseline residential emissions. However, a policy designed instead to minimize primary energy consumption instead of CO2 emissions will achieve a 48% reduction in annual carbon dioxide emissions from the nine largest energy consuming residential end-uses. Thus, we explore the uncertainty regarding the main assumptions and different policy goals in a detailed sensitivity analysis.

Results of our analysis suggest that, given the price-inelastic behavior in both the U.S. and EU regions, public policies aimed at fostering a transition to a more sustainable energy system in order to address the climate change challenge will require more than an increase in electricity retail price if they are to induce needed conservation efforts and the adoption of more efficient technologies by households.

With the enactment of the 2009 American Recovery and Reinvestment Act, U.S. President Obama made a public commitment to a new approach to energy production and transmission in the United States. It features installing smart meters and related technologies in residential homes, as part of transforming the current electrical grid into a “smart grid.” Realizing this transformation requires consumers to accept these new technologies and take advantage of the opportunities that they create. We use methods from behavioral decision research to understand consumer beliefs about smart meters, including in-depth mental models interviews and a follow-up survey with a sample of potential smart meter customers of a major U.S. mid-Atlantic electricity utility. In both the surveys and the interviews, most respondents reported wanting smart meters. However, these preferences were often based on erroneous beliefs regarding their purpose and function. Respondents confused smart meters with in-home displays and other enabling technologies, while expecting to realize immediate savings. They also perceived risks, including less control over their electricity usage, violations of their privacy, and increased costs. We discuss the policy implications of our results.

We assess the economic value of life-cycle air emissions and oil consumption from conventional vehicles, hybrid-electric vehicles (HEVs), plug-in hybrid-electric vehicles (PHEVs), and battery electric vehicles in the US. We find that plug-in vehicles may reduce or increase externality costs relative to grid-independent HEVs, depending largely on greenhouse gas and SO(2) emissions produced during vehicle charging and battery manufacturing. However, even if future marginal damages from emissions of battery and electricity production drop dramatically, the damage reduction potential of plug-in vehicles remains small compared to ownership cost. As such, to offer a socially efficient approach to emissions and oil consumption reduction, lifetime cost of plug-in vehicles must be competitive with HEVs. Current subsidies intended to encourage sales of plug-in vehicles with large capacity battery packs exceed our externality estimates considerably, and taxes that optimally correct for externality damages would not close the gap in ownership cost. In contrast, HEVs and PHEVs with small battery packs reduce externality damages at low (or no) additional cost over their lifetime. Although large battery packs allow vehicles to travel longer distances using electricity instead of gasoline, large packs are more expensive, heavier, and more emissions intensive to produce, with lower utilization factors, greater charging infrastructure requirements, and life-cycle implications that are more sensitive to uncertain, time-sensitive, and location-specific factors. To reduce air emission and oil dependency impacts from passenger vehicles, strategies to promote adoption of HEVs and PHEVs with small battery packs offer more social benefits per dollar spent.

The Society for Risk Analysis (SRA) has kindly authorised the EJRR to publish the comments of SRA Past Presidents on the Deepwater Horizon oil spill1. Going beyond news media accounts, these comments offer a first hand analysis of the effects of the oil spill on the field of risk analysis and risk regulation. Following the call for a moratorium on deep-sea drilling in Europe by GUnther Oettinger, the European Commissioner for Energy, the publication of these comments seems particularly timely. (AA)

Generators installed for backup power during blackouts could help satisfy peak electricity demand; however, many are diesel generators with nonnegligible air emissions that may damage air quality and human health. The full (private and social) cost of using diesel generators with and without emission control retrofits for fine particulate matter (PM2.5) and nitrogen oxides (NOx) were compared with a new natural gas turbine peaking plant. Lower private costs were found for the backup generators because the capital costs are mostly ascribed to reliability. To estimate the social costs from air quality, the changes in ambient concentrations of ozone (O3) and PM2.5 were modeled using the Particulate Matter Comprehensive Air Quality Model with extensions (PMCAMx) chemical transport model. These air quality changes were translated to their equivalent human health effects using concentration-response functions and then into dollars using estimates of "willingness-to-pay" to avoid ill health. As a case study, 1000 MW of backup generation operating for 12 hr/day for 6 days in each of four eastern U.S. cities (Atlanta, Chicago, Dallas, and New York) was modeled. In all cities, modeled PM2.5 concentrations increased (up to 5 microg/m3) due mainly to primary emissions. Smaller increases and decreases were observed for secondary PM2.5 with more variation between cities. Increases in NOx, emissions resulted in significant nitrate formation (up to 1 microg/m3) in Atlanta and Chicago. The NOx emissions also caused O3 decreases in the urban centers and increases in the surrounding areas. For PM2.5, a social cost of approximately $2/kWh was calculated for uncontrolled diesel generators in highly populated cities but was under 10 cent/kWh with PM2.5 and NOx controls. On a full cost basis, it was found that properly controlled diesel generators are cost-effective for meeting peak electricity demand. The authors recommend NOx and PM2.5 controls.

We explore the optimal size of the transmission line from distant wind farms, modeling the tradeoff between transmission cost and benefit from delivered wind power. We also examine the benefit of connecting a second wind farm, requiring additional transmission, in order to increase output smoothness. Since a wind farm has a low capacity factor, the transmission line would not be heavily loaded, on average; depending on the time profile of generation, for wind farms with capacity factor of 29–34%, profit is maximized for a line that is about 3/4 of the nameplate capacity of the wind farm. Although wind generation is inexpensive at a good site, transmitting wind power over 1600km (about the distance from Wyoming to Los Angeles) doubles the delivered cost of power. As the price for power rises, the optimal capacity of transmission increases. Connecting wind farms lowers delivered cost when the wind farms are close, despite the high correlation of output over time. Imposing a penalty for failing to deliver minimum contracted supply leads to connecting more distant wind farms.

In a restructured electricity market, utility-scale energy storage technologies such as advanced batteries can generate revenue by charging at low electricity prices and discharging at high prices. This strategy changes the magnitude and distribution of air quality emissions and the total carbon dioxide (CO2) emissions. We evaluate the social costs associated with these changes using a case study of 500MW sodium–sulfur battery installations with 80% round-trip efficiency. The batteries displace peaking generators in New York City and charge using off-peak generation in the New York Independent System Operator (NYISO) electricity grid during the summer. We identify and map charging and displaced plant types to generators in the NYISO. We then convert the emissions into ambient concentrations with a chemical transport model, the Particulate Matter Comprehensive Air Quality Model with extensions (PMCAMx). Finally, we transform the concentrations into their equivalent human health effects and social benefits and costs. Reductions in premature mortality from fine particulate matter (PM2.5) result in a benefit of 4.5¢kWh−1 and 17¢kWh−1 from displacing a natural gas and distillate fuel oil fueled peaking plant, respectively, in New York City. Ozone (O3) concentrations increase due to decreases in nitrogen oxide (NOx) emissions, although the magnitude of the social cost is less certain. Adding the costs from charging, displacing a distillate fuel oil plant yields a net social benefit, while displacing the natural gas plant has a net social cost. With the existing base-load capacity, the upstate population experiences an increase in adverse health effects. If wind generation is charging the battery, both the upstate charging location and New York City benefit. At $20 per tonne of CO2, the costs from CO2 are small compared to those from air quality. We conclude that storage could be added to existing electricity grids as part of an integrated strategy from a human health standpoint.

We model alternatives for moving bulk energy, including both private costs and accounting for environmental externalities by requiring the transport system to satisfy environment, health, and safety standards. In particular, we focus on the cost and environmental trade-offs between "coal by wire," mine-mouth generation with electricity transmission, and transporting the primary energy resources with generation near the customer. Having the bulk energy transport model satisfy standards avoids the controversy associated with estimating dollar costs for constrained visibility, noise, and 50/60 Hz electromagnetic fields. A sensitivity analysis examines the implications of a range of carbon-dioxide discharge charges.