Wealth maximisation and residential energy-efficiency retrofits: Insights from a real options model

IF 13.6 2区经济学 Q1 ECONOMICS

Energy Economics Pub Date : 2024-11-05 DOI:10.1016/j.eneco.2024.108022

Anthony Britto, Joris Dehler-Holland, Wolf Fichtner

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Abstract

The slow adoption of residential energy-efficiency retrofits continues to hamper the energy transition. We study incentives for adoption by proposing a model of optimal investment under uncertainty where the wealth-maximising agent has the option to delay. Stochastic portfolio returns and energy prices are taken into account. An extension of the model where the energy carrier is switched, e.g. from gas to electricity, is also considered. Exercise boundaries for the optimal stopping problem are estimated numerically for recent case studies of German buildings. Investment is generally not optimal at current energy prices and market conditions. Increasing correlation between gas and electricity prices erodes the value of technology switching. Comparative statics reveal that energy-efficiency investments become optimal at relatively lower energy prices as wealth, income, and savings behaviour increase, and portfolio drift and volatility decrease. Consequently, incentive to invest in retrofits is far more heterogeneous along wealth dimensions than standard discounted cash flow analyses suggest. An examination of retrofit subsidies demonstrates how free-riding by wealthier agents occurs when subsidies are not appropriately targeted. We show that the pursuit of economic efficiency in subsidy design might have regressive effects on the wealth distribution.

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财富最大化与住宅节能改造：实物期权模型的启示

住宅节能改造进展缓慢，继续阻碍着能源转型。我们提出了一个不确定性条件下的最优投资模型，在该模型中，财富最大化的代理人可以选择延迟投资，以此来研究采用节能技术的激励机制。该模型考虑了随机投资组合收益和能源价格。我们还考虑了该模型的扩展，即能源载体的转换，例如从天然气到电力的转换。针对最近的德国建筑案例研究，对最优停止问题的练习边界进行了数值估算。在当前的能源价格和市场条件下，投资通常不是最优的。天然气和电力价格之间的相关性不断增加，削弱了技术转换的价值。比较静态分析表明，随着财富、收入和储蓄行为的增加，以及投资组合漂移和波动的减少，在能源价格相对较低的情况下，节能投资成为最优选择。因此，投资节能改造的动机在财富方面的异质性远远大于标准贴现现金流分析所显示的。对节能改造补贴的研究表明，如果补贴的目标不明确，较富裕的主体就会搭便车。我们表明，在补贴设计中追求经济效益可能会对财富分配产生倒退效应。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Energy Economics ECONOMICS-

CiteScore

18.60

自引率

12.50%

发文量

524

期刊介绍： Energy Economics is a field journal that focuses on energy economics and energy finance. It covers various themes including the exploitation, conversion, and use of energy, markets for energy commodities and derivatives, regulation and taxation, forecasting, environment and climate, international trade, development, and monetary policy. The journal welcomes contributions that utilize diverse methods such as experiments, surveys, econometrics, decomposition, simulation models, equilibrium models, optimization models, and analytical models. It publishes a combination of papers employing different methods to explore a wide range of topics. The journal's replication policy encourages the submission of replication studies, wherein researchers reproduce and extend the key results of original studies while explaining any differences. Energy Economics is indexed and abstracted in several databases including Environmental Abstracts, Fuel and Energy Abstracts, Social Sciences Citation Index, GEOBASE, Social & Behavioral Sciences, Journal of Economic Literature, INSPEC, and more.