Incorporating Experience Curves in Appliance Standards Analysis

TitleIncorporating Experience Curves in Appliance Standards Analysis
Publication TypeJournal Article
Year of Publication2013
AuthorsDesroches, Louis-Benoit, Karina Garbesi, Colleen Kantner, Robert D. Van Buskirk, and Hung-Chia Yang
JournalEnergy Policy
Volume52
Start Page402
Pagination402-416
Date Published01/2013
PublisherElsevier
KeywordsEfficiency standards, Experience curves, Large appliances
Abstract

There exists considerable evidence that manufacturing costs and consumer prices of residential appliances have decreased in real terms over the last several decades. This phenomenon is generally attributable to manufacturing efficiency gained with cumulative experience producing a certain good, and is modeled by an empirical experience curve. The technical analyses conducted in support of U.S. energy conservation standards for residential appliances and commercial equipment have, until recently, assumed that manufacturing costs and retail prices remain constant during the projected 30-year analysis period. This assumption does not reflect real market price dynamics. Using price data from the Bureau of Labor Statistics, we present U.S. experience curves for room air conditioners, clothes dryers, central air conditioners, furnaces, and refrigerators and freezers. These experience curves were incorporated into recent energy conservation standards analyses for these products. Including experience curves increases the national consumer net present value of potential standard levels. In some cases a potential standard level exhibits a net benefit when considering experience, whereas without experience it exhibits a net cost. These results highlight the importance of modeling more representative market prices.

URLhttp://dx.doi.org/10.1016/j.enpol.2012.09.066