IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v130y2020ics1364032120302525.html
   My bibliography  Save this article

Distributional impacts of investment subsidies for residential energy technologies

Author

Listed:
  • Lekavičius, V.
  • Bobinaitė, V.
  • Galinis, A.
  • Pažėraitė, A.

Abstract

This study analyses the distributional impacts of investment subsidies paid to households that install residential energy technologies based on renewable energy sources. The subsidies, covering a significant part of the total investment, play a considerable role in households' energy decisions. Depending on their design, support measures may provide the most benefits to certain groups of society and thus, may cause increasing inequality. The potential distributional impacts of the investment subsidies are determined by the combination of technologies targeted and their costs, household income, support intensity, subsidy design restrictions, and the availability of additional measures. This study examines the support system for residential renewable energy technologies in the Lithuanian case by employing a microsimulation model. This analysis of existing measures provides more general results and highlights the policy features that cause distributional impacts. Therefore, the results are applicable in other countries as well. The analysis shows that although the support is efficient from an energy point of view, it provides the most benefits to households with higher income and thus, increases inequality. Moreover, the subsidies fail to reduce energy poverty due to the poorest households’ low capacity to invest. To obtain a flatter distribution of benefits, the design of support measures should consider the current situation of lower-income households and affordability issues.

Suggested Citation

  • Lekavičius, V. & Bobinaitė, V. & Galinis, A. & Pažėraitė, A., 2020. "Distributional impacts of investment subsidies for residential energy technologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 130(C).
    • Handle: RePEc:eee:rensus:v:130:y:2020:i:c:s1364032120302525
    DOI: 10.1016/j.rser.2020.109961
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032120302525
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.rser.2020.109961?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Scarpa, Riccardo & Willis, Ken, 2010. "Willingness-to-pay for renewable energy: Primary and discretionary choice of British households' for micro-generation technologies," Energy Economics, Elsevier, vol. 32(1), pages 129-136, January.
    2. Selvakkumaran, Sujeetha & Ahlgren, Erik O., 2019. "Determining the factors of household energy transitions: A multi-domain study," Technology in Society, Elsevier, vol. 57(C), pages 54-75.
    3. Pablo-Romero, María del P. & Pozo-Barajas, Rafael & Yñiguez, Rocío, 2017. "Global changes in residential energy consumption," Energy Policy, Elsevier, vol. 101(C), pages 342-352.
    4. Takanobu Kosugi & Yoshiyuki Shimoda & Takayuki Tashiro, 2019. "Neighborhood influences on the diffusion of residential photovoltaic systems in Kyoto City, Japan," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 21(4), pages 477-505, October.
    5. Berry, Audrey, 2019. "The distributional effects of a carbon tax and its impact on fuel poverty: A microsimulation study in the French context," Energy Policy, Elsevier, vol. 124(C), pages 81-94.
    6. Karsten Neuhoff & Stefan Bach & Jochen Diekmann & Martin Beznoska & Tarik El-Laboudy, 2013. "Distributional Effects of Energy Transition: Impacts of Renewable Electricity Support in Germany," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    7. Damette, Olivier & Delacote, Philippe & Lo, Gaye Del, 2018. "Households energy consumption and transition toward cleaner energy sources," Energy Policy, Elsevier, vol. 113(C), pages 751-764.
    8. Feng, Kuishuang & Hubacek, Klaus & Liu, Yu & Marchán, Estefanía & Vogt-Schilb, Adrien, 2018. "Managing the distributional effects of energy taxes and subsidy removal in Latin America and the Caribbean," Applied Energy, Elsevier, vol. 225(C), pages 424-436.
    9. William A Pizer & Steven Sexton, 2019. "The Distributional Impacts of Energy Taxes," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(1), pages 104-123.
    10. Andrew Chapman & Timothy Fraser & Melanie Dennis, 2019. "Investigating Ties between Energy Policy and Social Equity Research: A Citation Network Analysis," Social Sciences, MDPI, vol. 8(5), pages 1-18, April.
    11. Verde, Stefano F. & Pazienza, Maria Grazia, 2016. "Energy and climate hand-in-hand: Financing RES-E support with carbon revenues," Energy Policy, Elsevier, vol. 88(C), pages 234-244.
    12. Hecher, Maria & Hatzl, Stefanie & Knoeri, Christof & Posch, Alfred, 2017. "The trigger matters: The decision-making process for heating systems in the residential building sector," Energy Policy, Elsevier, vol. 102(C), pages 288-306.
    13. Sovacool, Benjamin K. & Lipson, Matthew M. & Chard, Rose, 2019. "Temporality, vulnerability, and energy justice in household low carbon innovations," Energy Policy, Elsevier, vol. 128(C), pages 495-504.
    14. Lang, Tillmann & Ammann, David & Girod, Bastien, 2016. "Profitability in absence of subsidies: A techno-economic analysis of rooftop photovoltaic self-consumption in residential and commercial buildings," Renewable Energy, Elsevier, vol. 87(P1), pages 77-87.
    15. Spyridon Karytsas & Ioannis Vardopoulos & Eleni Theodoropoulou, 2019. "Factors Affecting Sustainable Market Acceptance of Residential Microgeneration Technologies. A Two Time Period Comparative Analysis," Energies, MDPI, vol. 12(17), pages 1-20, August.
    16. Jacksohn, Anke & Grösche, Peter & Rehdanz, Katrin & Schröder, Carsten, 2019. "Drivers of renewable technology adoption in the household sector," Energy Economics, Elsevier, vol. 81(C), pages 216-226.
    17. Winter, Simon & Schlesewsky, Lisa, 2019. "The German feed-in tariff revisited - an empirical investigation on its distributional effects," Energy Policy, Elsevier, vol. 132(C), pages 344-356.
    18. Kerr, N. & Winskel, M., 2020. "Household investment in home energy retrofit: A review of the evidence on effective public policy design for privately owned homes," Renewable and Sustainable Energy Reviews, Elsevier, vol. 123(C).
    19. Vaclovas Miskinis & Arvydas Galinis & Inga Konstantinaviciute & Vidas Lekavicius & Eimantas Neniskis, 2019. "Comparative Analysis of the Energy Sector Development Trends and Forecast of Final Energy Demand in the Baltic States," Sustainability, MDPI, vol. 11(2), pages 1-27, January.
    20. Haq, Gary & Weiss, Martin, 2018. "Time preference and consumer discount rates - Insights for accelerating the adoption of efficient energy and transport technologies," Technological Forecasting and Social Change, Elsevier, vol. 137(C), pages 76-88.
    21. repec:prs:ecstat:estat_0336-1454_2017_num_491_1_10758 is not listed on IDEAS
    22. Gonzalez, Fidel, 2012. "Distributional effects of carbon taxes: The case of Mexico," Energy Economics, Elsevier, vol. 34(6), pages 2102-2115.
    23. Best, Rohan & Burke, Paul J. & Nishitateno, Shuhei, 2019. "Understanding the determinants of rooftop solar installation: evidence from household surveys in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(4), July.
    24. Galvin, Ray & Sunikka-Blank, Minna, 2018. "Economic Inequality and Household Energy Consumption in High-income Countries: A Challenge for Social Science Based Energy Research," Ecological Economics, Elsevier, vol. 153(C), pages 78-88.
    25. Andor, Mark & Voss, Achim, 2016. "Optimal renewable-energy promotion: Capacity subsidies vs. generation subsidies," Resource and Energy Economics, Elsevier, vol. 45(C), pages 144-158.
    26. Olivier Durand-Lasserve & Lorenza Campagnolo & Jean Chateau & Rob Dellink, 2015. "Modelling of distributional impacts of energy subsidy reforms: an illustration with Indonesia," OECD Environment Working Papers 86, OECD Publishing.
    27. repec:zbw:rwirep:0542 is not listed on IDEAS
    28. Xu, Li & Zhang, Qin & Shi, Xunpeng, 2019. "Stakeholders strategies in poverty alleviation and clean energy access: A case study of China's PV poverty alleviation program," Energy Policy, Elsevier, vol. 135(C).
    29. Newell, Richard G. & Pizer, William A. & Raimi, Daniel, 2019. "U.S. federal government subsidies for clean energy: Design choices and implications," Energy Economics, Elsevier, vol. 80(C), pages 831-841.
    30. Heiskanen, Eva & Matschoss, Kaisa, 2017. "Understanding the uneven diffusion of building-scale renewable energy systems: A review of household, local and country level factors in diverse European countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 580-591.
    31. Zimny, Jacek & Michalak, Piotr & Szczotka, Krzysztof, 2015. "Polish heat pump market between 2000 and 2013: European background, current state and development prospects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 791-812.
    32. Ortega-Izquierdo, Margarita & Paredes-Salvador, Andrés & Montoya-Rasero, Carlos, 2019. "Analysis of the decision making factors for heating and cooling systems in Spanish households," Renewable and Sustainable Energy Reviews, Elsevier, vol. 100(C), pages 175-185.
    33. Henri Martin, 2017. "Calculating the standard of living of a household: one or several equivalence scales?," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 491-492, pages 93-108.
    34. Manuel Frondel & Stephan Sommer & Colin Vance, 2015. "The burden of Germanyùs energy transition: An empirical analysis of distributional effects," Economic Analysis and Policy, Elsevier, vol. 45(c), pages 89-99.
    35. Jiang, Zhujun & Ouyang, Xiaoling & Huang, Guangxiao, 2015. "The distributional impacts of removing energy subsidies in China," China Economic Review, Elsevier, vol. 33(C), pages 111-122.
    36. Simpson, Genevieve & Clifton, Julian, 2016. "Subsidies for residential solar photovoltaic energy systems in Western Australia: Distributional, procedural and outcome justice," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 262-273.
    37. Lekavičius, Vidas & Galinis, Arvydas & Miškinis, Vaclovas, 2019. "Long-term economic impacts of energy development scenarios: The role of domestic electricity generation," Applied Energy, Elsevier, vol. 253(C), pages 1-1.
    38. Sahari, Anna, 2019. "Electricity prices and consumers’ long-term technology choices: Evidence from heating investments," European Economic Review, Elsevier, vol. 114(C), pages 19-53.
    39. Steinbach, Jan & Ragwitz, Mario & Bürger, Veit & Becker, Liv & Kranzl, Lukas & Hummel, Marcus & Müller, Andreas, 2013. "Analysis of harmonisation options for renewable heating support policies in the European Union," Energy Policy, Elsevier, vol. 59(C), pages 59-70.
    40. Roland Cunha Montenegro & Vidas Lekavičius & Jurica Brajković & Ulrich Fahl & Kai Hufendiek, 2019. "Long-Term Distributional Impacts of European Cap-and-Trade Climate Policies: A CGE Multi-Regional Analysis," Sustainability, MDPI, vol. 11(23), pages 1-26, December.
    41. Martinopoulos, Georgios & Papakostas, Konstantinos T. & Papadopoulos, Agis M., 2018. "A comparative review of heating systems in EU countries, based on efficiency and fuel cost," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 687-699.
    42. García-Maroto, I. & García-Maraver, A. & Muñoz-Leiva, F. & Zamorano, M., 2015. "Consumer knowledge, information sources used and predisposition towards the adoption of wood pellets in domestic heating systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 43(C), pages 207-215.
    43. Soile, Ismail & Mu, Xiaoyi, 2015. "Who benefit most from fuel subsidies? Evidence from Nigeria," Energy Policy, Elsevier, vol. 87(C), pages 314-324.
    44. Petrovich, Beatrice & Hille, Stefanie Lena & Wüstenhagen, Rolf, 2019. "Beauty and the budget: A segmentation of residential solar adopters," Ecological Economics, Elsevier, vol. 164(C), pages 1-1.
    45. Pereira, Diogo Santos & Marques, António Cardoso & Fuinhas, José Alberto, 2019. "Are renewables affecting income distribution and increasing the risk of household poverty?," Energy, Elsevier, vol. 170(C), pages 791-803.
    46. Wang, Qian & Hubacek, Klaus & Feng, Kuishuang & Wei, Yi-Ming & Liang, Qiao-Mei, 2016. "Distributional effects of carbon taxation," Applied Energy, Elsevier, vol. 184(C), pages 1123-1131.
    47. Claudy, Marius C. & Michelsen, Claus & O'Driscoll, Aidan, 2011. "The diffusion of microgeneration technologies - assessing the influence of perceived product characteristics on home owners' willingness to pay," Energy Policy, Elsevier, vol. 39(3), pages 1459-1469, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vona, Francesco, 2023. "Managing the distributional effects of climate policies: A narrow path to a just transition," Ecological Economics, Elsevier, vol. 205(C).
    2. Rydehell, Hanna & Lantz, Björn & Mignon, Ingrid & Lindahl, Johan, 2024. "The impact of solar PV subsidies on investment over time - the case of Sweden," Energy Economics, Elsevier, vol. 133(C).
    3. Katharine Heyl & Felix Ekardt & Lennard Sund & Paula Roos, 2022. "Potentials and Limitations of Subsidies in Sustainability Governance: The Example of Agriculture," Sustainability, MDPI, vol. 14(23), pages 1-26, November.
    4. Piotr Olczak & Dominik Kryzia & Dominika Matuszewska & Marta Kuta, 2021. "“My Electricity” Program Effectiveness Supporting the Development of PV Installation in Poland," Energies, MDPI, vol. 14(1), pages 1-16, January.
    5. Holt, Emily G. & Sunter, Deborah A., 2024. "National disparities in residential energy tax credits in the United States," Energy, Elsevier, vol. 300(C).
    6. Stewart, Fraser, 2021. "All for sun, sun for all: Can community energy help to overcome socioeconomic inequalities in low-carbon technology subsidies?," Energy Policy, Elsevier, vol. 157(C).
    7. Kröger, Mats & Longmuir, Maximilian & Neuhoff, Karsten & Schütze, Franziska, 2023. "The price of natural gas dependency: Price shocks, inequality, and public policy," Energy Policy, Elsevier, vol. 175(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ortega-Izquierdo, Margarita & Paredes-Salvador, Andrés & Montoya-Rasero, Carlos, 2019. "Analysis of the decision making factors for heating and cooling systems in Spanish households," Renewable and Sustainable Energy Reviews, Elsevier, vol. 100(C), pages 175-185.
    2. Emily Schulte & Fabian Scheller & Wilmer Pasut & Thomas Bruckner, 2021. "Product traits, decision-makers, and household low-carbon technology adoptions: moving beyond single empirical studies," Papers 2112.11867, arXiv.org.
    3. Emily Schulte & Fabian Scheller & Daniel Sloot & Thomas Bruckner, 2021. "A meta-analysis of residential PV adoption: the important role of perceived benefits, intentions and antecedents in solar energy acceptance," Papers 2112.12464, arXiv.org.
    4. Heiskanen, Eva & Matschoss, Kaisa, 2017. "Understanding the uneven diffusion of building-scale renewable energy systems: A review of household, local and country level factors in diverse European countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 580-591.
    5. Outcault, Sarah & Sanguinetti, Angela & Nelson, Leslie, 2022. "Technology characteristics that influence adoption of residential distributed energy resources: Adapting Rogers’ framework," Energy Policy, Elsevier, vol. 168(C).
    6. Arnold, Fabian & Jeddi, Samir & Sitzmann, Amelie, 2022. "How prices guide investment decisions under net purchasing — An empirical analysis on the impact of network tariffs on residential PV," Energy Economics, Elsevier, vol. 112(C).
    7. Jia, Zhijie & Lin, Boqiang, 2020. "Rethinking the choice of carbon tax and carbon trading in China," Technological Forecasting and Social Change, Elsevier, vol. 159(C).
    8. Nils Ohlendorf & Michael Jakob & Jan Christoph Minx & Carsten Schröder & Jan Christoph Steckel, 2021. "Distributional Impacts of Carbon Pricing: A Meta-Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(1), pages 1-42, January.
    9. Stefania Troiano & Daniel Vecchiato & Francesco Marangon & Tiziano Tempesta & Federico Nassivera, 2019. "Households’ Preferences for a New ‘Climate-Friendly’ Heating System: Does Contribution to Reducing Greenhouse Gases Matter?," Energies, MDPI, vol. 12(13), pages 1-19, July.
    10. Chepeliev, Maksym & Osorio-Rodarte, Israel & van der Mensbrugghe, Dominique, 2021. "Distributional impacts of carbon pricing policies under the Paris Agreement: Inter and intra-regional perspectives," Energy Economics, Elsevier, vol. 102(C).
    11. Houda Elmustapha & Thomas Hoppe & Hans Bressers, 2018. "Understanding Stakeholders’ Views and the Influence of the Socio-Cultural Dimension on the Adoption of Solar Energy Technology in Lebanon," Sustainability, MDPI, vol. 10(2), pages 1-17, January.
    12. Pronti, A. & Zoboli, R., 2024. "Something new under the sun. A spatial econometric analysis of the adoption of photovoltaic systems in Italy," Energy Economics, Elsevier, vol. 134(C).
    13. Ravigné, Emilien & Ghersi, Frédéric & Nadaud, Franck, 2022. "Is a fair energy transition possible? Evidence from the French low-carbon strategy," Ecological Economics, Elsevier, vol. 196(C).
    14. Li, Aijun & Peng, Dan & Wang, Daoping & Yao, Xin, 2017. "Comparing regional effects of climate policies to promote non-fossil fuels in China," Energy, Elsevier, vol. 141(C), pages 1998-2012.
    15. Nils Ohlendorf & Michael Jakob & Jan Christoph Minx & Carsten Schröder & Jan Christoph Steckel, 2018. "Distributional Impacts of Climate Mitigation Policies - a Meta-Analysis," Discussion Papers of DIW Berlin 1776, DIW Berlin, German Institute for Economic Research.
    16. Spyridon Karytsas & Ioannis Vardopoulos & Eleni Theodoropoulou, 2019. "Factors Affecting Sustainable Market Acceptance of Residential Microgeneration Technologies. A Two Time Period Comparative Analysis," Energies, MDPI, vol. 12(17), pages 1-20, August.
    17. Winter, Simon & Schlesewsky, Lisa, 2019. "The German feed-in tariff revisited - an empirical investigation on its distributional effects," Energy Policy, Elsevier, vol. 132(C), pages 344-356.
    18. Stewart, Fraser, 2021. "All for sun, sun for all: Can community energy help to overcome socioeconomic inequalities in low-carbon technology subsidies?," Energy Policy, Elsevier, vol. 157(C).
    19. Karytsas, Spyridon & Polyzou, Olympia & Karytsas, Constantine, 2019. "Factors affecting willingness to adopt and willingness to pay for a residential hybrid system that provides heating/cooling and domestic hot water," Renewable Energy, Elsevier, vol. 142(C), pages 591-603.
    20. Moz-Christofoletti, Maria Alice & Pereda, Paula Carvalho, 2021. "Distributional welfare and emission effects of energy tax policies in Brazil," Energy Economics, Elsevier, vol. 104(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:130:y:2020:i:c:s1364032120302525. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.