Econometric Modeling of the Effects of Energy Efficiency Standards on Appliance Shipments

Cost-benefit analysis of appliance energy efficiency standards requires an estimate of their impact on appliance shipments. This paper presents details of a shipment forecasting technique for appliances. The modeling method provides a dis-aggregated accounting of household decisions related to purchase, repair and replacement of appliances by fuel type and age group. The model contains a component for keeping track of appliance stock and vintage, and a component for modeling consumer decision-making. Consumer choice is modeled with a logit decision probability function whose econometric parameters are calibrated to historical trends. Inputs to consumer decision-making include appliance retail and installation costs, as well as forecasts of macroeconomic variables such as household income and housing construction. In this way, dis-aggregated shipments are forecast through the period 2003 to 2030. The method provides an explicit quantitative approach to modeling regulatory impacts. Furthermore, it demonstrates a generic framework that can be applied to a wide range of appliances and policy initiatives.