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on Regulation |
| By: | Javier Lopez Prol, (University of Graz); Karl W. Steininger (University of Graz) |
| Abstract: | After three years of discussion, the regulation of photovoltaic self-consumption in Spain has been finally passed on October 9th, 2015. We assess the impact of this regulation on the profitability (reflected by Internal Rate of Return) of potential investors in three different segments: residential and small and medium-size enterprises of the commercial and industrial sectors, paying special attention to the effect of the backup charge and the effect of financing cost. We then analyse three alternative regulation schemes focusing on the price at which the surplus electricity of the PV system is sold to the grid: mere self-consumption, net metering and net billing. For each of the investing segments and regulation schemes, we consider alternative configurations: with and without backup charge, and with own capital versus 80% externally financed capital at market interest rates. The results show that the current regulation will hinder the diffusion of self-consumption PV installations by making them economically infeasible across all segments. We further identify that this regulation creates incentivizes for inefficient behaviour, such as disconnection from the grid. According to our results and to the recommendations of the European Commission, we find that a net billing scheme would be more suitable for promoting PV diffusion at minimum cost for the system. |
| Keywords: | Net Metering; Net Billing; Internal Rate of Return; Royal Decree 900/2015, PV |
| JEL: | N74 O13 Q42 Q48 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpaper:2015-07&r=reg |
| By: | Simone Moriconi (Universita Cattolica del Sacro Cuore & University of Luxembourg, CREA); Pierre M. Picard (University of Luxembourg, CREA & Université Catholique de Louvain, CORE); Skerdilajda Zanaj (University of Luxembourg, CREA) |
| Abstract: | This paper studies competition in commodity taxation and product market regulation between trading partners. To explain the strategic interaction between governments and regulators, we present a two-country general equilibrium model in which destination-based commodity taxes finance public goods and product market regulation affects the number of firms in the market. We provide empirical evidence based on data for 21 OECD countries over the 1990-2008 period. Our results suggest that commodity taxation and product market regulation are interdependent policies. We confirm the absence of strategic interaction in commodity taxation between governments. Finally, we show that domestic regulation has a negative effect on domestic commodity taxation and that product market regulation is a strategic complement policy. |
| Keywords: | Regulation, commodity tax, strategic interactions |
| JEL: | F0 H1 H7 H87 L5 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2015-26&r=reg |
| By: | Wei Jin (School of Public Policy, Zheijang University); ZhongXiang Zhang (College of Management and Economics, Tianjin University) |
| Abstract: | In creating a level playing field that facilitates the deployment of renewable energy technology (RET), the traditional energy policy regime based on eliminating RET’s cost gaps versus fossil energy technology (FET) may be not sufficient. Building on an economic model of energy technology adoption that features network externality, this paper takes an explicit account of the potential importance of network externality in the design of RET adoption policies. We argue that as incumbent FET has established pervasive deployment and installed base advantages within the existing energy production, distribution and service network, it would create a network externality mechanism that makes it difficult to dislodge the dominant FET-based technological regime, leading to an inertia against the adoption of newly emerging RET even if energy policy regulations have been put in place to eliminate RET’s cost disadvantage. We hence propose that a reformulation of RET policy paradigm should consider extending the traditional scheme centring on eliminating cost gap to a new one that corrects for both cost and network externality gaps. |
| Keywords: | renewable energy deployment; energy technology adoption; network externality; climate technology policies |
| JEL: | Q41 Q42 Q48 Q54 Q55 Q58 H23 O13 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:1509&r=reg |
| By: | Löfgren, Åsa (Department of Economics, School of Business, Economics and Law, Göteborg University); Burtraw, Dallas (Resources for the Future); Wråke, Markus (Energy Unit at IVL); Malinovskaya, Anna (Resources for the Future) |
| Abstract: | Recent changes to the EU Emissions Trading System introduce structural changes regarding the initial distribution of emissions allowances, which are worth tens of billions of euros. A key change is the expanding role for auctions, which account for about half of the allowance allocation now and will be a growing share going forward. The use of revenue from auctions is a decision left to EU Member States and appears increasingly important. Well over half of auction revenue to date has been directed to energy and climate related purposes. Further, we do not find evidence that Member States have used state aid to electricity-intensive firms to strategically support domestic industry. The trading system is evolving in a way that is likely to improve its performance, but there remain important questions related the future price of allowances and the distribution and use of asset value created under the trading system. |
| Keywords: | auction; cap and trade; European Union; EU ETS; allocation; climate change; policy |
| JEL: | H23 P48 Q54 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0634&r=reg |
| 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=reg |
| By: | Christopher R. Knittel; Konstantinos Metaxoglou; Andre Trindade |
| Abstract: | We examine the environmental impact of the post-2005 natural gas glut in the United States due to the shale gas boom. Our focus is on quantifying short-term coal-to-gas switching decisions by different types of electric power plants in response to changes in the relative price of the two fuels. In particular, we study the following entities: investor-owned utilities (IOUs) and independent power producers (IPPs) in restructured markets coordinated by Independent System Operators, as well as IOUs in traditional vertically-integrated markets. Using alternative data aggregations and model specifications, we find that IOUs operating in traditional markets are more sensitive to changes in fuel prices than both IOUs and IPPs in restructured markets. We attribute our findings to differences in available gas-fired generating capacity with the most cost-efficient technology: electricity generators reduced their rate of investment in the restructured markets post restructuring. The heterogeneity in the response of fuel consumption to prices has implications for carbon dioxide (CO2) emissions for the entities considered. Using simple back-of-the-envelope calculations, the almost 70% drop in the price of natural gas between June 2008 and the end of 2012 translates to as much as 33% reduction in CO2 emissions for IOUs in traditional markets, but only up to 19% for IOUs in restructured markets. |
| JEL: | L5 L71 L94 Q4 Q5 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21627&r=reg |
| By: | Hancevic, Pedro |
| Abstract: | This paper measures the impact of the 1990 Clean Air Act Amendment on productivity and output of US coal-fired boilers. The Act led to power units adopting a number of different pollution abating strategies, one of which was an input change to lower SO2 emitting coal. A key feature is that each boiler is designed to burn a particular variety of coal, with significant deviations from the targeted coal characteristics resulting in productivity loss. The main innovation of the paper is to quantify the effect that switching to cleaner coal had on productivity and output. With data spanning over fifteen years, I incorporate the effect of this deviation directly into a production function to explicitly quantify the resulting productivity loss. Estimated output losses range from 0% to more than 6%, varying across regions, over time, and mainly depending on the proximity of generating units to low-sulfur sources. |
| Keywords: | productivity, production function, environmental regulation, sulfur dioxide, electricity generation, coal, Environmental Economics and Policy, Production Economics, Productivity Analysis, D24 L94 L51 Q51, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:211704&r=reg |
| By: | Klaus Eisenack (University of Oldenburg, Department of Economics); Julien Minnemann; Paul Neetzow; Reutter |
| Abstract: | What can institutional economics offer to analyze and shape the transformation of electricity systems towards a low-carbon future? This volume presents papers from a postgraduate research course in “Sustainability Economics and Management” in the winter term 2014/15. The introductory chapter sketches potential contributions from institutional economics and provides an overview of the course’s topic and the other chapters. The second chapter presents an institutional comparison of different options to integrate electricity storage into the system. The third chapter analyses the effect of different market structures for investment in electricity storage. The final chapter proposes and investigates a novel auctioning mechanism for offshore grid expansion. |
| Keywords: | power, energy, capacity, efficient storage deployment, competitive market, electricity, intermittent RES, system stability, economic efficiency, institutional analysis, Germany, wind energy, network expansion, incentives for cost efficiency, construction and operation bidding, institutional market design |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:old:dpaper:385&r=reg |