• Focus Area -
  • Type KAPSARC journal article
  • Date 25 June 2020


The purpose of this paper is to analyze the effects of electricity price changes and energy efficiency subsidy on household energy efficiency purchase and/or behavioural adjustment decisions. The analysis adds energy efficiency investment to a methodology that merges the physics of energy with microeconomic principles. The physical side informs the amount of electricity used to satisfy services that people desire, while the microeconomic side imposes a utility function that represents a household’s welfare. Several electricity pricing schemes and energy efficiency options are examined, with costs and benefits of each option explicitly modeled in the physical representation. Several insights are derived from performing an analysis for archetypical villas across Saudi Arabia. One, energy efficiency purchases lower the need for energy conservation. Households also lessen the extent to which they practice conservation as energy efficiency subsidies are raised. Additionally, as energy efficiency subsidies and electricity prices rise, the difference in household spending on other goods and services widens between the highest efficiency case and no added efficiency. This indirect rebound causes a situation where firms would increase their production, and thus energy use, to meet the additional demand by households for their goods.


Taylor & Francis Online


Walid Matar

Research Fellow Walid works on modeling energy systems. He is developing or has developed the following components of the KAPSARC Energy Model… Walid works on modeling energy systems. He is developing or has developed the following components of the KAPSARC Energy Model (KEM): electric power generation, oil refining, petrochemicals and fertilizers, cement production, and iron and steel. He is also working on a bottom-up residential electricity use framework that merges microeconomics with the physical laws governing electricity use.


  • Energy Systems Modeling
  • Optimization
  • Electricity Prices
  • Energy Efficiency and the Interdisciplinary Connection Between Energy Economics and Engineering

Publications See all Walid Matar’s publications

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