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

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  • Mayr, Dieter
  • Schmidt, Johannes
  • Schmid, Erwin

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%.

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  • Mayr, Dieter & Schmidt, Johannes & Schmid, Erwin, 2014. "The potentials of a reverse auction in allocating subsidies for cost-effective roof-top photovoltaic system deployment," Energy Policy, Elsevier, vol. 69(C), pages 555-565.
    • Handle: RePEc:eee:enepol:v:69:y:2014:i:c:p:555-565
    DOI: 10.1016/j.enpol.2014.01.029
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    8. Burtt, D. & Dargusch, P., 2015. "The cost-effectiveness of household photovoltaic systems in reducing greenhouse gas emissions in Australia: Linking subsidies with emission reductions," Applied Energy, Elsevier, vol. 148(C), pages 439-448.
    9. Xu, Zhitao & Elomri, Adel & Al-Ansari, Tareq & Kerbache, Laoucine & El Mekkawy, Tarek, 2022. "Decisions on design and planning of solar-assisted hydroponic farms under various subsidy schemes," Renewable and Sustainable Energy Reviews, Elsevier, vol. 156(C).
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    12. Luis Ramirez Camargo & Judith Franco & Nilsa María Sarmiento Babieri & Silvina Belmonte & Karina Escalante & Raphaela Pagany & Wolfgang Dorner, 2016. "Technical, Economical and Social Assessment of Photovoltaics in the Frame of the Net-Metering Law for the Province of Salta, Argentina," Energies, MDPI, vol. 9(3), pages 1-21, February.
    13. Matthäus, David, 2020. "Designing effective auctions for renewable energy support," Energy Policy, Elsevier, vol. 142(C).
    14. Elizondo Azuela, Gabriela & Barroso, Luiz & Khanna, Ashish & Wang, Xiaodong & Wu, Yun & Cunha, Gabriel, 2014. "Performance of renewable energy auctions : experience in Brazil, China and India," Policy Research Working Paper Series 7062, The World Bank.
    15. Elie, Luc & Granier, Caroline & Rigot, Sandra, 2021. "The different types of renewable energy finance: A Bibliometric analysis," Energy Economics, Elsevier, vol. 93(C).
    16. Duman, A. Can & Güler, Önder, 2020. "Economic analysis of grid-connected residential rooftop PV systems in Turkey," Renewable Energy, Elsevier, vol. 148(C), pages 697-711.
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