White Certificates - Energy Efficiency Programs under Private Information of Consumers

Energy efficiency is an objective of public interventions at least since the Public Utility Regulatory Policy Act of 1978 (PURPA). Recently, conservation has received considerable attention in the United States and in particular in the European Union but this time in order to mitigate global warming. Policy measures include regulations at the technical level and the introduction of white certificates in order to force utilities and firms to invest into conservation in a way similar to the already existing renewable energy quota. This paper derives the optimal mechanism if utilities must deal with white certificates facing consumers holding private information. The optimal mechanism has some theoretically interesting features like restricted participation and a discontinuity.