Beyond money

Abstract

Improving the energy efficiency of residential buildings is essential for achieving long-term climate and energy goals, yet the uptake of home energy retrofits remains limited. While financial incentives are widely used to address upfront cost barriers, less is known about how incentive delivery mechanisms and associated transaction costs affect household investment decisions and welfare. This study conducts a discrete choice experiment with 796 Dutch homeowners to examine preferences for retrofit incentive schemes that vary in incentive timing (upfront discounts versus post-installation subsidies) and application support (energy coaches, contractors, and pre-filled forms). Estimating mixed logit models in both preference and willingness-to-pay space, we find that homeowners systematically prefer post-installation subsidies over upfront discounts, with a particularly strong aversion to discounts when handled by contractors. Application support, particularly personalised assistance, is highly valued and generates substantial welfare gains. Heterogeneity analysis shows that energy-vulnerable households (defined by lower income, lower investment literacy, and lower energy literacy) exhibit persistently low willingness to pay for future energy savings, and that the valuation of application support varies across vulnerability dimensions. Overall, the results demonstrate that reducing transaction costs through administrative support can partially substitute for higher financial incentives, with important implications for the cost-effectiveness and equity of energy retrofit policies.