Linking household investment behaviour, energy systems and the economy

Individual investment decisions on energy efficiency technologies do not only influence our long-term energy demand, but also the growth of our economy, and this is the level of analysis for the macro level in CHEETAH (see project overview here). At the macro level analysis, CHEETAH ties together the understanding of consumer investment behaviour and risk preference from the micro level investigation and the demand scenarios in the meso-level analysis with an overall analysis of effects on the economy as a whole.

The impacts of energy efficiency policy on GDP, employment and exports have received increasing interest from policy makers, consumers and the scientific community in recent years. Especially in times of economic recession, it is essential to assess the effects of energy efficiency policy on economic output, employment as well impacts on the sector level.

The main drivers determining the macroeconomic effects of energy efficiency measures in households are on the one hand the reduction of the households’ energy cost and on the other hand the investments in energy efficiency technologies and services that lead to increased production in the sectors providing these. These translate subsequently into price and expenditure impulses and relative competitive advantages.

CHEETAH uses the projections from the energy-demand- level to provide detailed and disaggregated input to the macroeconomic model. CHEETAH therefore connects the micro-level findings on energy efficiency decision-making at consumer level and its implication at the energy system level with the macroeconomic effects that arise. In doing so, CHEETAH analyses the overall net employment effects induced by the deployment of energy efficiency technologies. They consist of direct effects triggered by additional net investments and changing consumption patterns, of indirect effects arising via the sectoral interweavement stated in input-output tables and investment-induced productivity gains and induced effects from the overall growth of the economy.