Do energy savings really save? Uncovering the residential electricity rebound effect in Indonesia

Energy efficiency is widely recognized as one of the most cost-effective strategies for reducing electricity consumption and mitigating greenhouse gas emissions. However, improvements in energy efficiency do not always translate into proportional reductions in electricity use because households may adjust their consumption behavior, giving rise to the residential electricity rebound effect. This study estimates household electricity efficiency and examines the residential electricity rebound effect in Indonesia using provincial panel data covering 33 provinces during 2010–2024. Energy efficiency is measured using Stochastic Frontier Analysis (SFA) within an energy demand frontier framework, while the rebound effect is estimated using a dynamic panel model based on the System Generalized Method of Moments (System GMM). The results show that the average household electricity efficiency is approximately 83%, suggesting substantial room for improving residential electricity efficiency across provinces. The estimated short-run rebound effect is 51%, indicating a partial rebound in which part of the expected electricity savings is offset by increased household electricity consumption. In contrast, the estimated long-run rebound effect is −13%, indicating a super-conservation effect, whereby improvements in electricity efficiency eventually lead to more-than-proportional reductions in residential electricity consumption. These findings suggest that residential electricity efficiency policies remain effective in reducing household electricity demand over the long term, although complementary demand-side and behavioral policies are needed to limit short-run rebound effects and maximize electricity savings.