Affordability of energy efficient appliances – indicators and evidence

Peer-reviewed paper 8-181-26

As the political debate around energy security, climate action, energy justice, and broader social issues evolve, the link between energy efficiency and affordability has become increasingly important for policy-makers. This paper presents recent scoping research and other evidence on the relationship between energy efficient product policy and affordability.

Drawing on a literature review and targeted analysis, the study identifies practical approaches to improving access to energy-efficient appliances and to better integrate affordability considerations into policy-making. It reviews how affordability is defined across different fields, and examines both traditional and alternative metrics that provide frameworks for assessing affordability.

The literature shows that low-income households are less likely to adopt energy-efficient appliances. Several studies find a positive correlation between energy efficiency and purchase price, with more efficient appliances often costing more upfront. However, evidence also indicates that higher efficiency does not always require higher prices and that, with appropriate policies, efficient appliances can be cheaper over time. In addition, lifetime household costs are typically lower, as improved efficiency reduces energy consumption.

Despite these benefits, significant barriers remain for low-income users, including high initial prices, limited access to financing and insufficient consumer information. Additional challenges include the limited availability of low-cost efficient models and the exclusion of certain appliance types from regulatory schemes, such as shared commercial appliances.

The paper aims to support policy-makers by informing improved policy design and implementation, fostering a more differentiated understanding of energy efficiency that incorporates technological, social, and economic dimensions. It also identifies areas for further work, including assessing the suitability of different affordability indicators.