Neighborhood Spillovers from Residential Energy Retrofit Programs

We estimate neighborhood spillovers in energy consumption using data from Canada’s largest residential energy retrofit program. Identification exploits variation in retrofit timing by comparing neighbors of retrofitted homes with neighbors of “Almost retrofitted” homes that completed a pre-retrofit audit but did not undertake upgrades. We find that neighboring homes reduce natural gas consumption by 1.2% in the short run and 1.4% in the long run, while electricity consumption falls by 1% in the long run. Spillovers persist for more than a decade and are more than five times larger for highly visible retrofits, suggesting conventional evaluations substantially understate program benefits.