The potentials of a reverse auction in allocating subsidies for cost-effective roof-top photovoltaic system deployment

Dieter Mayr, Johannes Schmidt and Erwin Schmid

Energy Policy, 2014, vol. 69, issue C, 555-565

Abstract: Photovoltaic (PV) has developed to one of the most promising technologies for renewable electricity generation. The Austrian government currently provides subsidies for roof-top PV systems through a constant, administratively determined feed-in tariff or an investment co-funding. In both subsidy schemes, applications are approved on a first-come, first-served basis. There are concerns about (i) the selection of suitable roofs for PV systems, and (ii) allocating subsidies among applicants to deploy roof-top PV systems cost-effectively. Thus we analyze the potentials of a simple discriminative first-price reverse auction application scheme. Applicants define individually the required level of subsidy and those with the lowest request for subsidies are selected. In an ex-post analysis, we evaluate the potentials of such a scheme in increasing power output and saving public spending for the federal state of Vorarlberg in Austria. Results indicate a potential increase of cumulated produced electricity between 15% and 18% in comparison to the current policy. In addition, a reverse auction-based system would lead to savings of public spending per kWh between 20% and 41%.

Keywords: Photovoltaic; Renewable energy policy; Reverse auction (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:69:y:2014:i:c:p:555-565

DOI: 10.1016/j.enpol.2014.01.029

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