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on Regulation |
| By: | Rahmatallah Poudineh; Tooraj Jamasb |
| Abstract: | The need for investment in capital intensive electricity networks is on the rise in many countries. A major advantage of distributed resources is their potential for deferring investments in distribution network capacity. However, utilizing the full benefits of these resources requires addressing several technical, economic and regulatory challenges. A significant barrier pertains to the lack of an efficient market mechanism that enables this concept and also is consistent with business model of distribution companies under an unbundled power sector paradigm. This paper proposes a market-oriented approach termed as “contract for deferral scheme” (CDS). The scheme outlines how an economically efficient portfolio of distributed generation, storage, demand response and energy efficiency can be integrated as network resources to reduce the need for grid capacity and defer demand driven network investments. |
| Keywords: | Distributed generation, storage, demand response, investment deferral, network regulation, business model |
| JEL: | L43 L51 L52 L94 |
| Date: | 2013–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1356&r=reg |
| By: | Langestraat, R. (Tilburg University) |
| Abstract: | Abstract: In this thesis we model and analyze several environmental policies in an existing mathematical representation of a perfectly competitive electricity market. We contribute to the literature by theoretically and numerically establishing a number of effects of environmental policies on investment strategies and prices. We provide a theoretical benchmark for environmental regulators aiming to achieve certain policy goals, and present a way to use numerical tools in case a complete theoretical analysis cannot be obtained. Two policies that charge firms for their carbon emissions, namely cap-and-trade and carbon taxation, are modeled into both a stylized deterministic and a two-stage stochastic framework. In the former we characterize equilibria, leading to key results on the dispatching order of technologies and identification of unused technologies. The latter framework is analyzed through a sampling study and focuses on the effectiveness of the policies in the presence of network limitations. We successively study a renewable energy obligation, which indirectly subsidizes electricity production from renewable resources through green certificates. We additionally explore the effects of technology banding, meaning that different renewable technologies are eligible for a different number of certificates. To account for some of the drawbacks of the existing UK technology banding system, we introduce an alternative banding policy. Finally, a feed-in tariff (FIT) is a direct subsidy on electricity production from renewable resources. In a stochastic framework we derive analytically that under linear cost assumptions, this price based instrument cannot guarantee that quantity based policy targets are met. Assuming non-linear convex cost, we find that the opposite holds and that a regulator has the freedom to set FITs in such a way that any desired mixture of renewable technologies can be attained at equilibrium. These FITs are derived analytically or, when necessary, estimated using the numerical tools that we propose. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ner:tilbur:urn:nbn:nl:ui:12-5930365&r=reg |
| By: | Joëlle Noailly; Victoria Shestalova |
| Abstract: | This paper studies the knowledge spillovers generated by renewable-energy technologies, unraveling the technological fields that benefit from knowledge developed in storage, solar, wind, marine, hydropower, geothermal, waste and biomass energy technologies. A CPB Background Document accompanies this�CPB Discussion Paper. Using citation data of patents in renewable technologies at seventeen European countries over the 1978-2006 period, the analysis examines the relative importance of knowledge flows within the same specific technological field (intra-technology spillovers), to other technologies in the field of power-generation (inter-technology spillovers), and to technologies unrelated to power-generation (external-technology spillovers). The results show significant differences across various renewable technologies. While wind technologies mainly find applications within their own technological field, a large share of innovations in solar energy and storage technologies find applications outside the field of power generation, suggesting that solar technologies are more general and, therefore, may have a higher value for society. Finally, the knowledge from waste and biomass technologies is mainly exploited by fossil-fuel power-generating technologies. The paper discusses the implications of these results for the design of R&D policies for renewable energy innovation. |
| JEL: | O33 Q42 Q48 Q55 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:262&r=reg |
| By: | Roberto Gómez-Calvet (Departament de Matemàtiques per a l’Economia i l’Empresa, Universitat de València, Spain); David Conesa (Departament de Matemàtiques per a l’Economia i l’Empresa, Universitat de València, Spain); Ana Rosa Gómez-Calvet (Departament de Matemàtiques per a l’Economia i l’Empresa, Universitat de València, Spain); Emili Tortosa-Ausina (Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | Over the last few years there have been increasing concerns about the energy mix in many countries. These concerns have been of greater magnitude for countries with a common energy regulation such as European Union (EU) member states. In order to choose a given energy mix, an important aspect to take into account is the efficiency involved to generate it. In this context, the present study analyzes the efficiency with which electricity and derived heat is produced in 25 EU member states over the last decade. This is carried out considering not only the inputs and outputs involved but, more importantly, which undesirable by-products are generated during the production process, which is a relevant issue for the EU climate policy. To this end, two nonparametric frontier models are considered. First, a Directional Distance Function, based on Briec’s (1997) proposal and, second, a modified version of Tone’s (2001) Slack Based Measure (SBM) model, both of which are especially appropriate in this particular context due to its treatment of undesirable outputs. Results from both models show that there are remarkable efficiency differences among EU countries and, therefore, the initiatives aiming at harmonizing environmental policies have still to be intensified. |
| Keywords: | Data Envelopment Analysis, European Union, efficiency, energy, slackbased measure |
| JEL: | Q4 Q43 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2013/17&r=reg |
| By: | Cox, Michael (IZA); Peichl, Andreas (ZEW Mannheim); Pestel, Nico (IZA); Siegloch, Sebastian (IZA) |
| Abstract: | Germany plays a pioneering role in replacing conventional power plants with renewable energy sources. While this is beneficial with respect to environmental quality, the energy turnaround implies increasing electricity prices for private households and firms. The extent to which this is associated with negative impacts on employment depends on the interrelationship between labor and electricity as input factors. In this paper, we estimate cross-price elasticities between electricity and heterogeneous labor for the German manufacturing sector. We use administrative linked employer-employee micro data combined with information on electricity prices and usage during the period 2003-2007. Our findings suggest that there is a weak substitutability between electricity and labor, when the production level is held constant. We find positive, but small conditional cross-price elasticities of labor demand with respect to electricity prices between 0.09 and 0.31. In case of adjustable output, we find moderate gross complementarity with negative unconditional cross-elasticities ranging between -0.06 and -0.69. Labor demand is affected differently across skill levels with low- and high-skilled workers being affected more than medium-skilled. Our estimates suggest that the announced increase of the EEG surcharge in 2014 would decrease overall employment in the manufacturing sector by 86,000 workers, a decline by 1.4 percent. |
| Keywords: | electricity prices, labor demand, employment, energy, Germany |
| JEL: | J08 J23 Q48 Q58 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp74&r=reg |
| By: | Rabindra Nepal (School of Economics, University of Queensland); John Foster (School of Economics, University of Queensland) |
| Abstract: | The National Electricity Market was established in 1998 as a response to the overall deregulation and restructuring of the Australian electricity sector. The wholesale market integration effects of this establishment, however, remain to be examined. We use pairwise unit root tests, cointegration analyses and a time varying coefficient model to determine the level and study the development of market integration in the regionally separate but interconnected markets in Australia. The results from the pairwise unit root tests provide a mixed evidence of price convergence while cointegration analyses does not clearly reject the absence of persistence price differences across the physically interconnected regions. The results from the time-varying coefficient model suggest an integrating market for electricity in Australia although full market integration has not been achieved yet. The results suggest the presence of significant transmission bottlenecks across the inter-regional interconnectors. Our results from cointegration analysis also supports the findings by Gonzalo and Lee (1998) that a proper use of the Johansen cointegration analysis requires a deeper data analysis than just the standard unit root tests. |
| Keywords: | pot prices, market integration, time series analysis |
| JEL: | C5 G1 L95 Q47 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqeemg:11-2013&r=reg |
| By: | Bipasa Datta; Yu-Shan Lo |
| Abstract: | Voice over Internet Protocol (VoIP) such as Skype that enables users to make free internet-based calls to other users has been seen as a threat to voice revenues by traditional network operators. While some mobile network operators (MNOs) attempt to block Skype's entry on their networks, some actually welcome it even if it apparently conflicts with their interests in making calling profits. In this paper we develop a Hotelling-style model of network competition between two MNOs to analyse their incentives to accommodate or block Skype. We find that accommodation is the dominant strategy of an MNO whenever its equilibrium voice market share is at least 29%. Furthermore, the overall Nash equilibium of the game can be either symmetric (where Skype's entry is either accommodated or blocked by both MNOs) or asymmetric (where only one has the incentive to accommodate) depending upon the consumers' preference for a certain network and the quality of Skype-based interconnection. In a symmetric accommodation equilibrium, the MNO with a lower (higher) customer valuation is better-off (worse-off) relative to the one where entry is blocked. |
| Keywords: | Mobile network competition; Hotelling model, Voice over IP and Skype; entry; voice and network market shares |
| JEL: | D43 L13 L96 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:13/32&r=reg |
| By: | Chatterji, Shurojit; Ghosal, Sayantan; Walsh, Sean; Whalley, John |
| Abstract: | What's the role of unilateral measures in global climate change mitigation in a post-Durban, post 2012 global policy regime? We argue that under conditions of preference heterogeneity, unilateral emissions mitigation at a subnational level may exist even when a nation is unwilling to commit to emission cuts. As the fraction of individuals unilaterally cutting emissions in a global strongly connected network of countries evolves over time, learning the costs of cutting emissions can result in the adoption of such activities globally and we establish that this will indeed happen under certain assumptions. We analyze the features of a policy proposal that could accelerate convergence to a low carbon world in the presence of global learning. |
| Keywords: | Unilateral initiatives, mitigation, spillovers, global learning, technology transfer, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:504&r=reg |