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Selling and Saving Energy: Energy Efficiency Obligations in Liberalized Energy Markets.
- Source :
- Energy Journal; 2020 Special Issue, Vol. 41, p191-213, 23p
- Publication Year :
- 2020
-
Abstract
- In Europe, energy efficiency obligations are imposed on energy retailers competing in liberalized energy markets. They comply by subsidizing energy efficiency investments made by energy end-users from within or outside their customer base. We develop a model describing how competition in the energy market affects compliance strategies. We find that, instead of selecting the most cost-effective investments options, firms may either target their most elastic customers, which enables them to increase their retail price, or their competitor's customers, which protects their sales. Allowing firms to trade obligations can restore cost-effectiveness, but reduces consumer surplus. Overall, the degree of flexibility that should be incorporated into such programs crucially depends on the degree of heterogeneity across investment costs and the relative weights governments assign to cost-effectiveness and consumer surplus. [ABSTRACT FROM AUTHOR]
- Subjects :
- ENERGY consumption
CONSUMERS' surplus
PRICE increases
RESPONSIBILITY
MARKETS
Subjects
Details
- Language :
- English
- ISSN :
- 01956574
- Volume :
- 41
- Database :
- Complementary Index
- Journal :
- Energy Journal
- Publication Type :
- Academic Journal
- Accession number :
- 147331378
- Full Text :
- https://doi.org/10.5547/01956574.41.SI1.lgir