Effects of diversified subsidies on the decisions of infrastructure operators considering charging infrastructure construction level and price sensitivity

Liangui Peng and Ying Li ()
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Liangui Peng: East China University of Science and Technology
Ying Li: East China University of Science and Technology

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2024, vol. 26, issue 5, No 17, 11343-11377

Abstract: Abstract Electric vehicles are one of the key measures to decarbonize the transportation industry. However, insufficient charging infrastructure hinders the process of vehicle electrification. The government implements investment and operation subsidies for charging infrastructure to overcome this problem. The different effects of different subsidy models on the decisions of infrastructure operators have not been fully discussed in the literature. In addition, the existing literature also lacks attention to consumer preferences for charging convenience and price sensitivity. Therefore, to fill this gap, this study develops four optimization models under the four scenarios of no subsidy (Model N), investment subsidy (Model I), operation subsidy (Model O), and compound subsidy (Model B) to examine and compare the effect of government subsidy. At the same time, consumer preferences are taken into account. The effects of policy, market, cost, and time factors on price, demand, and profit are discussed. Our general equilibrium analysis yields three important findings. First, the government subsidy for charging infrastructure is important and necessary. The government subsidy has a double effect. Differently, the investment subsidy has a direct effect only on the supply side, and the operation subsidy has a direct effect on both the supply and demand side. Thus, the operation subsidy would be a better choice than the investment subsidy. Second, increasing the construction level of charging infrastructure has a strong incentive effect on charging demand and can effectively inhibit refueling demand, while charging demand is less sensitive to changes in charging prices. Third, measures such as reducing the charging cost, increasing the refueling cost, and shortening the time gap are all favorable for promoting the charging infrastructure. This study not only extends the research on charging infrastructure policies from a theoretical perspective but also provides a reference for government policy adjustments. The government should provide appropriate policies according to the development status of different markets.

Keywords: Investment subsidy; Operation subsidy; Double effect; Consumer preferences (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10668-023-03305-x

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