Peer Effects from Energy Efficiency Retrofits: Visibility Matters (Yassin 2023)

Source

Yassin, Kareman. “Essays in Energy and Environmental Economics.” PhD dissertation, University of Ottawa, 2023. Supervised by Abel Brodeur; co-supervised by Maya Papineau. Chapter 3 covers peer effects. Presented at CIREQ-CIRANO workshop (Feb 2024) and Canadian Economics Association conference (2023). Seminar at Hitotsubashi Institute for Advanced Study (2025).

Key Findings

Causal Peer Effects from Retrofits

• Uses Canada’s largest home energy efficiency retrofit program.
• Close neighbors of retrofitted homes reduce monthly natural gas consumption by ~2.4% and electricity consumption by ~1%.
• Findings consistent across three different comparison groups.

Visibility Is the Key Moderator

• Visible retrofits (windows, doors, exterior wall insulation) have ~3.5 times the peer effect on neighbor energy savings compared to less visible retrofits (natural gas furnace upgrades).
• This is the first causal estimate quantifying the visibility gap for energy efficiency peer effects.

Distance Decay

• Peer effect weakens as distance to retrofitted homes increases.
• Strongest effects in immediate proximity.

Methodology

• Approximately a decade of monthly house-level energy billing data from a Canadian Prairie city.
• Causal identification through spatial variation in retrofit timing.
• Three comparison groups for robustness.

Theoretical Significance

This study directly tests the mechanism hypothesized by Rogers’ diffusion theory: observability is a precondition for technology diffusion through social influence. For invisible technologies like insulation (hidden in walls) or heating systems (hidden in basements), the peer channel that drives solar PV adoption (Bollinger & Gillingham 2012) is fundamentally weakened.

Relevance to Solar Fool

This is the strongest empirical evidence that passive thermal technologies face an inherent adoption disadvantage due to invisibility. If the peer-effect multiplier is 3.5x for visible vs. invisible measures, then passive thermal cannot rely on the neighbor-to-neighbor diffusion that powered rooftop solar. Implications:

1. Passive thermal needs a visibility strategy: external signage, distinctive architectural elements, or community demonstration projects that make the technology observable.
2. Container-based prototypes may have an advantage: a physical, visible unit on a site is more observable than insulation hidden in walls.
3. Community campaigns (like SEAI’s home energy events in Ireland) showed awareness but not action---visibility alone may be necessary but not sufficient.