Equitable reverse auctions supporting household energy investments

Rohan Best

Energy Policy, 2023, vol. 177, issue C

Abstract: A major challenge faced by policymakers has been determining appropriate subsidy amounts for household energy investments. This can result in inequitable support being either insufficient or excessive. Equitable reverse auctions offer a novel approach to address these issues. Households can bid an amount as a subsidy from the government that they require to go ahead with an energy investment. The lowest bids are successful in a reverse auction, allowing for cost-effective government support. The novel part is the pursuit of equity, as these auctions can occur separately for a pre-determined number of carefully chosen socio-economic groups. Equitable reverse auctions would lower inequality by design, relative to a common benchmark of equal subsidies, for a given government budget and environmental outcomes. Compared to a standard reverse auction, an equitable reverse auction will have greater equality by design but lower cost-effectiveness. However, the design of equitable reverse auctions is cost-effective within each socio-economic group. Non-additional subsidy spending would be reduced through reverse auctions. Equitable reverse auctions would be flexible to fit circumstances across countries, time, and technologies.

Keywords: Equity; Reverse auction; Household; Solar; Electric vehicle; Battery (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:177:y:2023:i:c:s0301421523001337

DOI: 10.1016/j.enpol.2023.113548

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