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on Regulation |
| By: | Tangerås, Thomas (Research Institute of Industrial Economics (IFN)) |
| Abstract: | An increasing reliance on solar and wind power has raised concern about system ability to consistently satisfy electricity demand. This paper examines countries’ unilateral incentives to achieve supply security through capacity reserves and market integration in a multinational electricity market. Capacity reserves protect consumers against blackouts and extreme prices, but distort consumption and investment. Market integration alleviates supply constraints, but requires costly network reinforcement. Capacity reserves can be up- or downward distorted, but network investment is always insufficient in equilibrium. Capacity reserves are smaller when there are fi…nancial markets or when dispatched solely to resolve domestic supply constraints. |
| Keywords: | Capacity mechanism; Decentralized policy making; Multinational electricity market; Network investment; Security of supply |
| JEL: | D24 H23 L94 Q48 |
| Date: | 2017–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1162&r=reg |
| By: | Yin Chu (Zhongnan University of Economics and Law); J. Scott (Department of Economics, University of Tennessee); Jacob LaRiviere (Department of Economics, University of Tennessee and Microsoft) |
| Abstract: | This paper investigates the transmission of fossil fuel commodity spot market price changes to procurement costs of U.S. power producers. We measure and compare the speed and magnitude with which spot prices predict procurement costs using restricted access fuel price data. Natural gas spot prices are quickly reflected in procurement costs. Coal spot prices offer very little predictive power to coal procurement costs. Although not causal, the empirical results also show differences across regulatory status. These findings may have implications for the electricity market deregulation literature that creates marginal cost curves as a competitive benchmark. |
| Keywords: | electric power industry; fossil fuel market; pass-through; deregulation; asymmetric price adjustment |
| JEL: | D40 L51 L94 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:ten:wpaper:2017-02&r=reg |
| By: | Pedro I. Hancevic; Hector M. Nunez; Juan Rosellón |
| Abstract: | Mexico plans to implement a national program to support the adoption of distributed photo-voltaic generation (DPVG) among qualified households. The main objectives of such a program would be to reduce the burden of the substantial federal energy subsidy and increase the share of renewable energy sources used to generate electricity. In this paper we assess the current conditions under which the Mexican residential electricity sector operates, and quantify the potential effects that the massive adoption of DPV systems would have on household expenditure and welfare, subsidy reduction, pollution and water resource usage. Based on the positive results in terms of both economic and environmental effects, our paper provides a significant support for further design and implementation of a DPVG program. |
| Keywords: | distributed solar photovoltaic generation, residential electricity consumption, energy subsidies, air pollution, water resource usage |
| JEL: | Q28 Q42 Q53 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1663&r=reg |
| By: | John A. List; Robert D. Metcalfe; Michael K. Price; Florian Rundhammer |
| Abstract: | The literature has shown the power of social norms to promote residential energy conservation, particularly among high usage users. This study uses a natural field experiment with nearly 200,000 US households to explore whether a financial rewards program can complement such approaches. We observe strong impacts of the program, particularly amongst low-usage and lowvariance households, customers who typically are less responsive to normative messaging. Our data thus suggest important policy complementarities between behavioral and financial incentives: whereas non-pecuniary interventions disproportionately affect intense users, financial incentives are able to substantially affect the low-user, sticky households. |
| Keywords: | social norms, financial incentives, energy conservation, field experiment |
| JEL: | C93 Q4 D03 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2017-05&r=reg |
| By: | Florens Flues; Kurt van Dender |
| Abstract: | Energy affordability can be defined as a household’s ability to pay for necessary levels of energy use within normal spending patterns. This paper uses three indicators to measure energy affordability risk in 20 OECD countries. Energy affordability risk differs widely between countries. The countries with the highest GDP per capita tend to have the lowest levels of energy affordability risk. The paper then analyses how indicators of energy affordability change in response to a hypothetical tax reform that increases taxes on natural gas, heating oil and electricity in most countries analysed. Results show that, if combined with an income-tested cash transfer using one third of the change in revenue resulting from the tax reform, the reform generally improves energy affordability. If combined with a lump-sum transfer instead, results show that energy affordability increases only according to the most selective of the three indicators. |
| Keywords: | carbon pricing, distributional effects, energy affordability, energy poverty, energy taxation |
| JEL: | H23 I32 I38 Q48 Q52 |
| Date: | 2017–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ctpaaa:30-en&r=reg |
| By: | Antonio Bento; Kenneth Gillingham; Kevin Roth |
| Abstract: | The firm response to regulation is seldom as controversial as in the context of fuel economy standards, a dominant policy to reduce emissions from vehicles worldwide. It has long been argued that such standards lead to vehicle weight changes that increase accident fatalities. Using unconditional quantile regression, we are the first to document the effect of the Corporate Average Fuel Economy (CAFE) standards on the vehicle weight distribution. We find that on net CAFE reduced fatalities, with lowered mean weight dominating increased dispersion. When monetized, this effect suggests positive net benefits from CAFE even with no undervaluation of fuel economy. |
| JEL: | H23 I18 Q48 Q58 R41 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23340&r=reg |
| By: | Katrina Jessoe (Department of Agricultural and Resource Economics, University of California, Davis); Maya M. Papineau (Department of Economics, Carleton University); David Rapson (Department of Economics, University of California, Davis) |
| Abstract: | The largest decile of commercial electricity customers comprises half of commercial sector electricity usage. We quantify a substantial split incentives problem that exists when these large firms are on electricity-included property lease contracts. Using exogenous variation in weather shocks, we show that customers on tenant-paid contracts use 6-14% less electricity in summer months. The policy implications are promising. Nationwide energy savings from aligning incentives for the largest 10% of commercial customers exceeds analogous savings from the entire residential electricity sector. It is also cost-effective: switching to tenant-paid contracts via sub-metering has a private payoff period of under one year. |
| Keywords: | Electricity; Principal-Agent Problem; Contracts |
| JEL: | D22 L14 Q51 |
| Date: | 2017–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:17-07&r=reg |
| By: | Alexander Zerrahn |
| Abstract: | Since the 1990s, (onshore) wind power has become an important technology for electricity generation throughout the world. The economic rationale is the mitigation of negative externalities of conventional technologies, in particular emissions from fossil fuel combustion. However, wind power itself is not free of externalities. Wind turbines are alleged visual and noise impacts as well as threats to wildlife. Further indirect economic effects comprise costs for integrating variable wind electricity into the power system. Economic outcomes, such as employment and GDP, can be positively or negatively affected both locally and nationally. This Roundup summarizes evidence from multiple literatures on mitigated and imposed external costs and further indirect economic effects. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwrup:111en&r=reg |
| By: | Bertsch, Valentin; Geldermann, Jutta; Lühn, Tobias |
| Abstract: | Many countries introduced subsidy schemes that were successful in incentivising investments into residential solar PV. The resulting growth of the global PV market was accompanied by cost reductions for PV systems, reductions of PV subsidies and, often, increasing electricity retail prices. Along with decreasing costs for battery storages, these developments made self-consumption and self-sufficiency continuously more attractive. However, the profitability of PV-storage systems depends on many factors, including technological, political and geographical aspects. We present a simulation model to identify the most profitable sizes of PV and storage systems from a household perspective and explore what drives the profitability of self-consumption and self-sufficiency. We compare and contrast Germany and Ireland to account for regulatory and geographical differences. Our results show that PV-storage systems are generally profitable in Germany and that, after minor technology cost reductions, this result holds even in the absence of subsidies. In Ireland, such systems are not yet profitable but this may change soon with expected technology costs reductions. The share of electricity demand that will be required from the grid may be reduced to 25-35%. Implications for the electricity retail business and policy makers are discussed including distributional concerns and system efficiency considerations. |
| Keywords: | Solar PV, self-consumption, self-sufficiency, battery storage |
| JEL: | C63 Q41 Q42 Q48 |
| Date: | 2017–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78644&r=reg |
| By: | Hao Yu; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology); Bao-Jun Tang; Zhifu Mi; Su-Yan Pan |
| Abstract: | Based on databases of Science Citation Index Expanded (1981-present) and Social Sciences Citation Index (2002-present), this paper applies the bibliometric method to analyze the scientific publications of low-carbon energy technology investment. By characterizing the basic information of the publications, we found: the historical development process is clearly divided into two stages; the field of low-carbon energy technology investment has entered a stage of rapid development; the strength of developed countries is far greater than that of developing countries; the comprehensive strength of the United States ranks the first in the field, followed by UK and Denmark and only China and Turkey are developing countries among the top 15 countries; the auctorial collaboration degree in this field shows a clear upward trend, but institutional and national collaboration degrees are steady and relatively low. In addition, distributions of geography, journals and subjects, productive authors and institutions, frequently cited articles, etc. are obtained: articles in this area are mainly distributed in the USA, several countries in Europe and China; the most productive journal, author and institution are Energy Policy, Lund H from Denmark and National Technical University of Athens in Greece; Energy Fuel is the most popular subject among all the outcomes; the most frequently cited article is written by Demirbas published in Energy Policy in 2007. According to the frequency analysis of keywords, it reveals that: "renewable energy" is a kind of keyword used most frequently; "carbon capture and storage technology" is an emerging keyword which is increasingly concerned about; scholars pay widespread attention to electricity issues, especially the feed-in tariff; the policy mainly includes energy policy and climate policy; the real option theory is the most widely used theory; the existing uncertainty is summarized as the cost uncertainty and policy uncertainty. In the end, several suggestions for the future research are given. |
| Keywords: | Low-carbon energy technology; Energy investment; Bibliometric; Frequency analysis |
| JEL: | Q54 Q40 |
| Date: | 2017–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:biw:wpaper:106&r=reg |
| By: | Antoine Bonleu (Aix-Marseille Univ. (Aix-Marseille School of Economics), CNRS, EHESS and Centrale Marseille) |
| Abstract: | The aim of this paper is to explain over-regulation and local social capital as barriers to immigration. The interest of social networks is that conflict resolution is independent of the law. Hence, if local individuals develop local social capital and regulation, foreigners without social networks are disadvantaged and can less easily migrate. We develop a two-country search-theoretic model where we endogenize the choice of procedural formalism (PF) and the network size. This model features two different equilibria: a Mediterranean equilibrium with PF and dense local social network and a Scandinavian and Anglo-Saxon equilibrium without PF and local social networks. |
| Keywords: | housing market regulation, local social capital, mobility, climate amenities, social networks |
| JEL: | R38 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1714&r=reg |
| By: | Broberg, Thomas (CERE and the Department of Economics, Umeå University); Egüez, Alejandro (CERE and the Department of Economics, Umeå University) |
| Abstract: | Institutional structures may cause considerable inefficiencies in the use of energy. In this paper, we investigate the energy efficiency of multi-dwelling buildings in Sweden to find out whether the type of ownership matters. More specifically, we investigate whether rental apartment buildings are less efficient than cooperative apartment buildings and whether public ownership has a negative impact on energy efficiency. A conceptual framework is presented to illustrate that such differences could be explained by the split incentive problem and deviations from profit maximizing interests. The empirical analysis is based on a unique dataset that combines data from energy performance certificates with ownership data on residential units. The results indicate that cooperative apartment buildings are significantly more energy efficient than buildings with rental apartments. The results also indicate that publicly owned buildings have lower energy performance than privately owned ones. |
| Keywords: | Energy efficiency; Energy performance certificates; Multi-dwelling buildings; Split incentives; Public versus private management; Profit satisficing |
| JEL: | Q41 Q48 |
| Date: | 2017–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2017_004&r=reg |
| By: | Matt V. Leduc; Matthew O. Jackson; Ramesh Johari |
| Abstract: | When a new product or technology is introduced, potential consumers can learn its quality by trying the product, at a risk, or by letting others try it and free-riding on the information that they generate. We propose a dynamic game to study the adoption of technologies of uncertain value, when agents are connected by a network and a monopolist seller chooses a policy to maximize profits. Consumers with low degree (few friends) have incentives to adopt early, while consumers with high degree have incentives to free ride. The seller can induce high-degree consumers to adopt early by offering referral incentives - rewards to early adopters whose friends buy in the second period. Referral incentives thus lead to a `double-threshold strategy' by which low and high-degree agents adopt the product early while middle-degree agents wait. We show that referral incentives are optimal on certain networks while inter-temporal price discrimination (i.e., a first-period price discount) is optimal on others, and discuss welfare implications. |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1509.06544&r=reg |
| By: | Junichi Yamasaki |
| Abstract: | Railroad access can accelerate the technological progress in the industrial sector and therefore induce structural change and urbanization, the two common features of modern economic growth. I examine this particular mechanism in the context of Japanese railroad network expansion and modern economic growth in the late 19th century and early 20th centuries. By digitizing a novel data set that measures the use of steam engines at the factory level, allowing me to directly observe the diffusion of steam power, I analyze the effect of railroad access on the adoption of steam power. To overcome the endogeneity prob- lem, I determine the cost-minimizing path between destinations, and use this to construct an instrument for railroad access. I find that railroad access led to an increased adoption of steam power by factories, which in turn reallocated labor from the agricultural to the industrial sector, thereby inducing structural change. Railroad network also broke mean reversion in population growth, eventually leading to urban- ization. My results support the view that railroad network construction was key to the modern economic growth in pre-First World War Japan. |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1000&r=reg |