The talk will be delivered by Dr. Siddharth Singh, UCL School of Management
21 August, 2023, Bengaluru: The Office of Research and Publications (R&P) at IIM Bangalore will host a research seminar on ‘Resource Allocation under Income Disparity and Valuation Heterogeneity: Redesigning the Community Solar Business Model’, to be led by Dr. Siddharth Singh, UCL School of Management (Production & Operations Management area), at 11.30 am on 1st September 2023, at Classroom K-21. The seminar will be based on joint research work with Owen Wu from the Kelley School of Business at Indiana University.
Abstract: The challenge of optimally allocating a limited resource along with its associated cost/benefit among consumers with heterogeneous income levels and private resource valuations arises in many situations. The paper tackles this challenge in the context of utility-led community solar (CS). Traditionally, CS participants supported solar projects by sharing solar capacity and its associated costs. With the falling cost of solar, CS now yields net savings, rather than incurring a net cost. Retaining their original design, CS programs pass savings onto participating consumers, who are only a small fraction of the residents. Consequently, CS programs (i) are unable to distribute the gains among the broader community; and (ii) can no longer tap into the willingness-to-pay of green-conscious participants.
The program design needs to be rethought. The researchers model heterogeneity in consumers’ incomes and green energy valuations. They study various alternative program designs. The most sophisticated one offers consumers income-dependent menus of subscription capacity and rate options. This approach improves social welfare significantly, closing over 90% of the gap between the current approach and a theoretical first-best. It achieves this by ensuring that CS capacity is accessible to everyone who wants it and restoring the opportunity for highly green-conscious consumers to support solar energy. The researchers further illustrate the usefulness of the proposed design using numerical studies calibrated by data from actual CS programs. They also endogenize the CS program sizing decision and find that their proposed design leads to larger CS projects. In sum, carefully redesigning CS programs can create significant welfare improvements. More generally, in resource allocation problems with income and valuation heterogeneity, there is significant value to be gained from explicitly using income information in deciding allocations.
Speaker Profile: Dr. Siddharth Singh is an Assistant Professor in the Operations & Technology Group in the University College London School of Management. He joined UCL after completing his PhD in Operations Management at the Tepper School of Business at Carnegie Mellon University. Prior to his PhD, Siddharth was an Associate at the Boston Consulting Group.
Dr. Siddharth Singh’s research focuses on studying how technological advancements are shaping the way we think about business, and the role that regulators should play to promote responsible technology deployment. His research is in the domains of sustainable operations and service operations, and uses methodologies from game theory, optimization and queueing theory. His research appears in Manufacturing & Service Operations Management and Production and Operations Management.
Webpage Link: https://www.mgmt.ucl.ac.uk/people/siddharthsingh
The talk will be delivered by Dr. Siddharth Singh, UCL School of Management
21 August, 2023, Bengaluru: The Office of Research and Publications (R&P) at IIM Bangalore will host a research seminar on ‘Resource Allocation under Income Disparity and Valuation Heterogeneity: Redesigning the Community Solar Business Model’, to be led by Dr. Siddharth Singh, UCL School of Management (Production & Operations Management area), at 11.30 am on 1st September 2023, at Classroom K-21. The seminar will be based on joint research work with Owen Wu from the Kelley School of Business at Indiana University.
Abstract: The challenge of optimally allocating a limited resource along with its associated cost/benefit among consumers with heterogeneous income levels and private resource valuations arises in many situations. The paper tackles this challenge in the context of utility-led community solar (CS). Traditionally, CS participants supported solar projects by sharing solar capacity and its associated costs. With the falling cost of solar, CS now yields net savings, rather than incurring a net cost. Retaining their original design, CS programs pass savings onto participating consumers, who are only a small fraction of the residents. Consequently, CS programs (i) are unable to distribute the gains among the broader community; and (ii) can no longer tap into the willingness-to-pay of green-conscious participants.
The program design needs to be rethought. The researchers model heterogeneity in consumers’ incomes and green energy valuations. They study various alternative program designs. The most sophisticated one offers consumers income-dependent menus of subscription capacity and rate options. This approach improves social welfare significantly, closing over 90% of the gap between the current approach and a theoretical first-best. It achieves this by ensuring that CS capacity is accessible to everyone who wants it and restoring the opportunity for highly green-conscious consumers to support solar energy. The researchers further illustrate the usefulness of the proposed design using numerical studies calibrated by data from actual CS programs. They also endogenize the CS program sizing decision and find that their proposed design leads to larger CS projects. In sum, carefully redesigning CS programs can create significant welfare improvements. More generally, in resource allocation problems with income and valuation heterogeneity, there is significant value to be gained from explicitly using income information in deciding allocations.
Speaker Profile: Dr. Siddharth Singh is an Assistant Professor in the Operations & Technology Group in the University College London School of Management. He joined UCL after completing his PhD in Operations Management at the Tepper School of Business at Carnegie Mellon University. Prior to his PhD, Siddharth was an Associate at the Boston Consulting Group.
Dr. Siddharth Singh’s research focuses on studying how technological advancements are shaping the way we think about business, and the role that regulators should play to promote responsible technology deployment. His research is in the domains of sustainable operations and service operations, and uses methodologies from game theory, optimization and queueing theory. His research appears in Manufacturing & Service Operations Management and Production and Operations Management.
Webpage Link: https://www.mgmt.ucl.ac.uk/people/siddharthsingh