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Assessing electricity reduction program under the presence of the other energy saving programs using quasi-experimental design: a case study of South Korea

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Abstract

Energy demand side management has been a continuously crucial assignment for policymakers, having a lot of benefits involving peak and carbon reduction, energy cost avoids, and security. It is timely to evaluate the performance of energy demand management program since it will carry out a salient role in the net-zero era. Quantifying the energy policy effects ex-post involves several challenges including the identification of certain policy effects that would be mixed with the other policies and biases that can be occurred in the experiment process. The randomized controlled trial design is a priority consideration but is still hard to realize. We suggest adopting a quasi-experimental approach of difference-in-difference combined with variance-in-adoption to measure the effect of a household electricity reduction program in Korea, which is not randomly designed and deployed with the other electricity demand management programs. Our results demonstrate that the electricity reduction program achieved 17.89% household electricity reduction. Also, extending the program period could contribute to lower residential electricity consumption, although the marginal increase rate was diminished by changes to the electric rate system. To promote participation and increase cost-effectiveness, differentiated policy by group and identifying the optimal program period are recommended.

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Fig. 1

Source: authors described based on Dougherty et al. (2015), p. 75

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Notes

  1. It should be noted that the RCT and quasi-experimental indicates the way of experiment design, whereas DID is a method to measure the difference between ex-post and ex-ante.

  2. The analysis should be conducted controlling for households’ observed socio-demographic characteristics and unobserved heterogeneity (Harding and Hsiaw, 2014).

  3. \(j=0\) means the program participation time, and \(-\overline{m }\) and \(\overline{m }\) denote pre- and post-treatment periods, respectively.

  4. We used 2021 average exchange rates ($1 = 1.144.6 KRW).

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Authors and Affiliations

  1. District Heating and Power Research Team, Korea Energy Economics Institute, 405-11 Jongga-ro, Jung-Gu, Ulsan, 44543, South Korea

    Jiyong Park & Taeyoung Jin

  2. Energy Environment Policy and Technology, Graduate School of Energy and Environment, Korea University, 145 Anam-Ro, Sungbuk-Gu, Seoul, 02841, South Korea

    JongRoul Woo

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  1. Jiyong Park
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Highlights

• The performance of Korean electricity reduction program was evaluated.

• Variation-in-adoption and difference-in-difference methods were combined.

• It was derived that Korea electricity reduction program achieved 17.89% savings.

• Differentiated energy demand management policy by group would be recommended.

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Park, J., Woo, J. & Jin, T. Assessing electricity reduction program under the presence of the other energy saving programs using quasi-experimental design: a case study of South Korea. Energy Efficiency 16, 9 (2023). https://doi.org/10.1007/s12053-023-10094-9

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