facilities to use a single meter to measure the difference between the total generation and consumption
of electricity by allowing the meter to turn both forward and backward. Customers effectively receive retail
prices for the excess electricity they generate. When combined with time of use pricing, this can result in
an attractive value proposition for photovoltaics and other on site power production. In states that do not
have net metering, a second meter must be installed to measure the electricity flowing back to the host
utility, and the utility purchases the power at a rate much lower than the retail price which is a disin 
centive to the development of distributed generation.
Insufficient and imperfect information can also hamper energy efficiency. Information about energy 
efficient options is often incomplete, unavailable, expensive, and difficult to obtain. When knowledge
about the energy features of products and their economics is insufficient, investments in energy efficien 
cy are unlikely. This insufficient knowledge is compounded by uncertainties associated with energy price
fluctuations and risks related to irreversible investments, both of which lead to high hurdle rates (i.e., the
expected rate of return on a potential investment that is required by the investor) and a slow pace of
technology diffusion.
While information for most goods and services is imperfect, it is particularly difficult to learn
about the performance and costs of energy efficient technologies and practices, because the benefits are
often not directly observable. For example, households receive a monthly electricity bill that provides no
breakdown of individual end uses, making it difficult to assess the benefits of efficient appliances and
other products. The complexity of design, construction, and operation of buildings makes it difficult, in
fact, to characterize the extent that any particular building is energy efficient. What looks like apathy
about energy use may more accurately reflect confusion, uncertainty, and lack of time to explore more
efficient alternatives.
Even while recognizing the importance of life cycle calculations, consumers often encounter
decision making complexities, and end up falling back on simpler first cost rules of thumb. While some
energy efficient products can compete on a first cost basis, many of them cannot. Properly trading off
energy savings versus higher purchase prices involves comparing the time discounted value of the energy
savings with the present cost of the equipment a calculation that can be difficult for purchasers to
understand and compute, even assuming one knew future energy costs. This is one of the reasons
Towards a Climate Friendly  
Built Environment

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