The structure of energy efficiency investment in the UK households and its average monetary and environmental savings

Socioeconomic and behavioural variables that influence the household’s adoption of energy efficiency measures such as cavity and loft insulation and upgrades to the boiler are identified, contrary to previous literature. By extending Brechling and Smith’s (1994) and Hassett and Metcalfʹs (1995) models, it is shown that the application of the Energy Act 2011, which contains provisions on the Green Deal, the new Energy Company Obligation (ECO) and the private rented sector, needs to follow a tailored strategy to reach the low adoption households identified by my model. Moreover, for the current adopters of the analysed measures, average monetary and environmental adoption benefits are estimated based on Parti and Parti’s (1980) demand model. These estimates are smaller than their expected values showing an important energy efficiency gap in the sector. Particularly low cost measures can bring important savings that can help to meet the "pay as you save" rule (i.e., the Golden rule) of the new regulation. My model also shows that a poor state of dwelling repair can reduce the adoption benefits increasing the need of subsidies that will be financed through consumer’s energy bills. However, this can increase the number of households in fuel poverty.