| 20 January, Thursday (1:00pm-2:30pm) Session 2B: Energy Economics |
Use of Experimental Auctions to Determine Demand for Renewable Energy in Kiribati
Author/s: David Raitzer, Manisha Pradhananga, Semee Yoon, Rafayil Abbasov
Estimates of demand are critical to understanding appropriate strategies for rural electrification, especially in contexts where grid extension is particularly costly. Rural electrification via solar home systems also can have high up-front costs that constrain demand in the absence of access to finance. Demand analysis, especially for financing, has typically relied on assumptions and expert opinion, or, at best, has utilized “stated preference” approaches that are subject to a range of biases. To go beyond the limitations of stated preference approaches, this study uses an innovative experimental auction, which is implemented in a manner that provides revealed preferences, in the context of Kiribati, a small pacific island country where a minority of the population has access to sufficient grid electricity. The study uses the approach to determine demand for solar home systems and credit for the purchase of those systems. This is the first use of the experimental auction approach for determining demand for financing arrangements, the first use of the approach in the Pacific region, and one of the first uses of the technique for energy. The presentation will give an overview of the methods and preliminary results.
JEL codes: Q41, H43, D12, D14