| By: |
Grossi, Luigi;
Heim, Sven;
Hüschelrath, Kai;
Waterson, Michael |
| Abstract: |
The harmonization and integration of separate national energy markets to an
interconnected internal European market is a top priority of the European
Commission. However, as energy policy largely remains subject to national
sovereignty, a higher degree of integration can cause unilateral national
policies to harm interconnected markets. We investigate the impact of two
distinct national reforms in Germany - the phase-out of nuclear power plants
after the Fukushima incident and the expansion of renewables promoted by fixed
feed-in tariffs and unlimited priority feed-in - on neighbouring countries. We
find that the phase-out triggered price increases of up to 19 percent in
neighbouring countries whilst the renewable energy support schemes caused a
price decrease of up to 0.17 percent for each percent of additional generation
from German renewables. We also apply a novel approach to estimate the degree
of market integration and find large differences between neighbouring
countries in a range from 14 percent to 99 percent. Our findings point up the
need for increased efforts to harmonize national energy policies, but also the
need to consider the impact of unilateral environmental measures on other
countries' supplies in the context of a partially integrated and partly
unilateral system. |
| Keywords: |
Energy,Electricity,Market Integration,Nuclear Phase-Out,Renewables |
| JEL: |
L51 L94 Q41 Q48 Q54 |
| Date: |
2015 |
| URL: |
http://d.repec.org/n?u=RePEc:zbw:zewdip:15072&r=ind |