Inferring Preferences from Narratives – Insights into the Energy Efficiency Gap

Policymakers are encountering difficulties when promoting energy-efficient retrofits. In a recent study, we analysed written survey responses to gain insights into homeowners' renovation decisions.
Inferring Preferences from Narratives – Insights into the Energy Efficiency Gap
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Improving energy efficiency is crucial in transitioning to a low-carbon economy, particularly in the building sector. However, policymakers face challenges in encouraging households to invest in retrofits. Despite the availability of large-scale subsidy programs, owners are not renovating their properties enough. To provide better insights for policymakers, we surveyed homeowners in Switzerland. By asking open-ended questions, we obtained personal narratives from respondents about their retrofit decisions. Our analysis revealed that most owners only undertook renovation projects when building components required replacement.

Homeowners approach energy efficiency investments opportunistically.

We found that many households that did not invest in retrofits believed that their homes were already energy efficient enough and did not see the need for such investments. Additionally, many respondents did not renovate due to financial concerns.

Homeowners who invested in energy efficiency often did so because a building technology malfunctioned and needed replacing. For these respondents, monetary savings from energy efficiency were not the primary motivation for investing in renovations. Co-benefits, such as improved comfort and reduced environmental footprint, were equally or even more important for investing than saving money from lower energy consumption.

Narratives provided new insights into renovation decisions.

Our research was based on “narratives,” an emerging approach that involved participants providing written responses to open-ended survey questions. In contrast to multiple-choice questions, this approach does not give predetermined answer choices. Instead, it enables respondents to express their views and ideas on energy efficiency investments in their own words.

To implement our study, we surveyed around 3,000 single-family homeowners in Zurich, Switzerland, in February 2020. Respondents first answered a series of multiple-choice questions about reasons for or against undertaking retrofits, followed by an open-ended question on the same topic. This setup allowed us to compare the answers from the two elicitation procedures.

The rankings based on narratives differed from those derived from multiple-choice questions, as shown in Table 1. In the closed-ended questions, respondents typically cited addressing environmental issues and increasing comfort as the top reasons for renovating. However, the narratives revealed a different perspective - the main reason was to replace old parts of the building. Also, the importance of co-benefits of energy efficiency, such as comfort gains and environmental benefits, had reduced substantially when using open-ended questions.

Table 1: Renovators’ top reasons for performing energy-efficient retrofits

Topic
 Open-ended
 Multiple-choice
Replace broken elements
45.5 %
57.6 %
To reduce my ecological footprint
30.0%
69.0 %
To save money
28.8 %
36.7 %
Increase comfort
24.6 %
68.5 %
Increase resale value
4.8 %
25.2 %
Note: Renovators were homeowners who performed a retrofit 5 years before the survey or planned to do so in the following 5 years. They first chose among several multiple-choice options about their reasons for renovating. After that, the same respondents answered an open-ended question about their decision to retrofit.

In order to classify open-ended survey responses into topics, we created a text analysis approach since the traditional AI-based topic models were not appropriate for our situation. These models were designed for longer texts with numerous samples, whereas survey responses are typically brief, and the sample size is small. Our dictionary-based method is semi-manual, where words were pre-grouped automatically by their similarity and then manually allocated to topics chosen by the researcher. This approach proved particularly useful for short texts and few observations, as is common with open-ended survey responses.

Low awareness about available subsidies among homeowners.

Our research revealed low awareness and claims of subsidies among homeowners. Respondents who had renovated to replace broken parts were particularly less aware of government funding possibilities. Possibly they could have renovated earlier if they had known more about subsidies, indicating the need for information campaigns.

When survey participants were asked about their preferred policies to increase the uptake of retrofits, it was no surprise that many favored an increase in subsidies. However, it is worth noting that energy-efficiency grants in Switzerland are already quite generous: they cover between 10% and 50% of the renovation costs (with the average subsidy amounting to about 17 000 CHF in 2019).[1] The second and third most popular policies centered around improving institutions related to retrofits by reducing bureaucracy and providing more information to owners.

We were unable to identify any particular socioeconomic factors that could help policymakers in directing subsidies towards specific groups of people, except for age (non-renovators tended to be slightly older). Additionally, there were no significant differences in policy preferences between those who renovated and those who did not.

Renovations are crucial to address the energy efficiency gap.

As policymakers strive to promote energy efficiency, our research addresses a persistent challenge they face. Despite setting ambitious energy retrofit goals for the building sectors, achieving these targets can prove difficult for many developed economies. For more than four decades, researchers have acknowledged the energy efficiency gap, which refers to society's failure to invest in energy efficiency despite its potential to do so.

Switzerland provides a good example of the energy efficiency gap. In 2019, 64.7 % of households used oil and gas heating systems,[2] and the renovation rate remained low despite over 200 million Swiss francs being made available for energy-efficient renovations in that year, making it one of the largest federal subsidies by the Swiss Federal Office for Environment, Transport, Energy and Communications.[3] Notably, homeowners claimed only a part of these available subsidies. For the energy system's transformation to be significantly impacted, the low renovation rate needs to be increased.[4]

Narratives suggest that subsidies may have been mistargeted.

Homeowners’ narratives uncovered that repairing defective parts was the primary driver of energy-efficient retrofits. Most owners undertook retrofits out of necessity rather than based on long-term planning. Hence, further increasing subsidies might not have the desired effect but rather encourage free riding. However, respondents who carried out renovations often lacked awareness of existing subsidies and would appreciate reduced bureaucratic barriers to retrofitting. Consequently, an effective policy package should not only provide monetary incentives but also consider institutional factors such as ease of information access and reducing bureaucratic burdens.

Eliciting narratives allowed us to gain a new perspective on respondents’ retrofit motivations - an approach that can help policymakers in the future. As AI and chatbots continue to advance, text-based interactions will become more prevalent, creating an opportunity for researchers and policymakers. Respondents tend to reveal more details regarding their preferences for energy efficiency through this approach, compared to traditional multiple-choice-based questions. By analyzing these narratives, researchers can obtain valuable insights that aid policymakers in closing the energy efficiency gap.

[1] Das Gebäudeprogramm, Tabellensammlung 2019: https://www.dasgebaeudeprogramm.ch/de/publikationen-und-fotos/jahresberichte/

Harmonisiertes Fördermodell der Kantone (HFM): https://www.endk.ch/de/dokumentation/harmonisiertes-foerdermodell-der-kantone-hfm?set_language=de

[2] Swiss Federal Office of Energy (2022) Energy Statistics.
https://www.bfe.admin.ch/bfe/en/home/supply/statistics-and-geodata/energy-statistics.html

[3]https://www.efv.admin.ch/efv/de/home/themen/finanzpolitik_grundlagen/subv_subvueberpruef/db_bundessubv.html

[4] Balthasar A, Schalcher HR (2020) Forschung für die Schweizer Energiezukunft. Resümee des Nationalen Forschungsprogramms «Energie». Hrsg.: Leitungsgruppen der Nationalen Forschungsprogramme «Energiewende» (NFP 70) und «Steuerung des Energieverbrauchs» (NFP 71). Schweizerischer Nationalfonds. Bern.

Poster image: elenabsl, stock.adobe.com

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