Behavioral Assumptions Underlying Energy Efficiency Programs for Business

Date Published

January 1, 2009


This white paper examines the behavioral assumptions underlying utility sponsored energy efficiency programs offered to businesses in California. It describes how assumptions about business decision making (that are built into the design of these programs) can affect the ability of these programs to foster increased investment in energy efficient technology.

Historically, most utility sponsored energy efficiency programs in California have been designed to cause businesses to make their buildings more energy efficient and purchase energy efficient equipment (e.g., lights, HVAC, motors, etc.). This has generally been accomplished by providing utility customers with information about the availability and cost of energy efficient alternatives and economic incentives designed to make these alternatives more economically attractive. The policy paradigm underlying these programs is what has been called the Physical Technical Economic Model (PTEM).

Within the PTEM paradigm, the only consumer behavior of interest is the consumer’s decision to purchase energy efficient technology alternatives. Consumer behaviors that influence how often, when and for what purposes energy is used are not of interest except insofar as these behaviors may cause an offset in the savings that result when efficient alternatives are installed – for example, spillover effects.



Freeman, Sullivan & Co.

Author Names:

Sullivan, Michael