Study On Subsidy Design For PPP Waste-to-Energy Projects

With the acceleration of urbanization,the phenomenon of "garbage siege city" is becoming more and more serious.As an effective way of waste recycling treatment,PPP has been widely used in waste-to-energy.However,due to the characteristics of low calorific value and high moisture of waste in China,auxiliary fuel is often needed to be added during incineration.This leads to the frequent phenomenon that some firms cheat subsidies by mixing fossil energy.Therefore,designing a scientific subsidy mechanism to regulate the behavior of the firms and promote the sustainable operation for PPP waste-to-energy projects demands prompt solution.At present,most scholars’ studies on government subsidies for PPP waste-to-energy projects do not consider the influence of opportunistic behavior of the firms,and ignore the importance of waste calorific value for subsidy level.In this paper,we design a scientific electricity price subsidy mechanism for PPP waste-to-energy projects by mathematical modeling.Considering the influence of the firm’s mixing burning behavior,this paper studies how the government should design the subsidy mechanism.The main content of this paper includes three parts: First,literature review — the paper sorts out the related research on contract design and government subsidies for PPP projects.Secondly,modeling — the mathematical models of two kinds of subsidy mechanisms based on waste disposal volume and waste heating value are constructed.Then,analysis—the optimal decisions of the two subsidy mechanisms are analyzed,and the boundary conditions of the two subsidy mechanisms are given.Finally,numerical study—the validity and reliability of the model are verified by numerical examples.Our results show that:(1)For the two subsidy mechanisms,the mixing ratio and expected profit of the firm are in direct proportion to the subsidy price of the total power generation(total power generation per unit waste);(2)Compared with no-subsidy,the mixing ratio of the firm will increase under the two subsidy mechanisms.However,the subsidy mechanism based on waste disposal volume will increase the profit of the firm,while the subsidy mechanism based on waste heating value will not necessarily increase the profit of the firm,which is related to the waste heating value;(3)Under the optimal decision-making situation,the social welfare of the two subsidy mechanisms can be maximized.Compared with the subsidy mechanism based on waste disposal volume,the optimal mixing ratio of the subsidy mechanism based on waste heating value is lower,and the subsidy amount is far less than that based on waste disposal volume.In addition,the optimal social welfare of the two subsidy mechanisms depends on the combined effects of waste heating value,tax coefficient and consumers’ utility per unit electricity purchase.The study results of this paper aim to provide theoretical support for the government to design the subsidy mechanism scientifically,and to provide policy suggestions to ensure the sustainable operation for PPP projects of waste-to-energy.