nep-reg New Economics Papers
on Regulation
Issue of 2018‒07‒09
sixteen papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Green Energy Finance in Australia and New Zealand By Diaz-Rainey, Ivan; Sise, Greg
  2. Policy and Regulation for Energy Storage Systems By Miguel Vazquez; Matteo di Castelnuovo
  3. The transition in play worldwide employment trends in the electricity sector By Montt, Guillermo E.; Maître, Nicolas.; Amo-Agyei, Silas.
  4. Auction design and auction outcomes By Koutroumpis, Pantelis; Cave, Martin
  5. Gender and climate change: Do female parliamentarians make difference? By Mavisakalyan, Astghik; Tarverdi, Yashar
  6. Do digital information technologies help unemployed job seekers find a job? Evidence from the broadband internet expansion in Germany By Gürtzgen, Nicole; Nolte, André; Pohlan, Laura; van den Berg, Gerard J.
  7. Cross-border Electricity Interconnectors in the EU: the Status Quo By Gert Brunekreeft; Roland Meyer
  8. Electricity availability: A precondition for faster economic growth? By Rohan Best; Paul J. Burke
  9. An empirical investigation on the distributional impact of network charges in Germany By Schlesewsky, Lisa; Winter, Simon
  10. Technology, business model, and market design adaptation toward smart electricity distribution: Insights for policy making By Pereira, Guillermo Ivan; Specht, Jan Martin; Pereira da Silva, Patrícia; Madlener, Reinhard
  11. Investment choice with managerial incentive schemes By Shubhro Sarkar; Suchismita Tarafdar
  12. What Will Make Energy Systems Sustainable? By Angela Köppl; Stefan Schleicher
  13. Stretching the Duck's Neck: The effect of climate change on future electricity demand By Rivers, Nicholas; Shaffer, Blake
  14. How EU Markets Became More Competitive Than US Markets: A Study of Institutional Drift By Gutierrez, German; Philippon, Thomas
  15. Can an Emission Trading Scheme really reduce CO2 emissions in the short term? Evidence from a maritime fleet composition and deployment model By Gu, Yewen; Wallace, Stein W.; Wang, Xin
  16. Intermittent electric generation technologies and smart meters: substitutes or complements By Fadoua Chiba; Sebastien Rouillon

  1. By: Diaz-Rainey, Ivan (Asian Development Bank Institute); Sise, Greg (Asian Development Bank Institute)
    Abstract: We explore the history and current status of green energy finance in Australia and New Zealand. Although both countries have enviable renewable energy resources with a 100% renewable mix considered feasible, the two countries present highly contrasting contexts for energy finance. Currently, and largely for historical reasons, renewables make up over 80% of the electricity capacity in New Zealand, whereas in Australia this is 17%. Interestingly, between them and over time, the two countries have employed most of the important policy tools available to incentivize renewables and green energy finance (e.g., carbon taxes, carbon trading, a green investment bank, a green certification market, and feed-in-tariffs). Despite this, we show that between 2004 and 2017 both countries did not meet their potential in terms of renewables and have lower levels of green energy investment relative to gross domestic product per capita than many other developed countries. The Australian and New Zealand context provides many lessons for other jurisdictions—ranging from the need for cross-party and regulatory commitment to energy transition, to the need for policy stability. Indeed, a key issue in Australia and New Zealand is the challenge of designing electricity markets that support energy transition and the investment that it requires. Incumbents in both jurisdictions are fearful of a “death spiral” induced by distributed power, and in Australia political instability and market design issues contributed to a major energy crisis in 2017. However, the crisis, the Paris Agreement, and the associated impetus of new governments in both countries suggest green energy investment is set to increase in the coming years.
    Keywords: energy finance; energy transition; green investment bank; feed-in-tariffs; emissions trading; electricity markets; green certificate market
    JEL: F21 G20 H23 O13 Q40 Q42 Q48 Q54 Q55 Q58
    Date: 2018–05–03
  2. By: Miguel Vazquez; Matteo di Castelnuovo
    Abstract: We analyze the changes in the regulation of electricity systems required to adapt to the presence of energy storage. To that end, we begin by identifying different types of services provided by storage. As services have different economic properties, the economic mechanisms required to organize them will be different as well. There are two relevant “arenas” for storage services: i) buy and sell energy in different periods (including energy related to ancillary services); and ii) avoid the need to transport energy from one point to another, i.e. the need to use transmission and/or distribution networks. Consequently, this involves two kinds of regulatory challenges, because storage compete with different types of services. The first regulatory challenge is related to wholesale market design, because flexibility services can be sold in “competitive” wholesale markets (energy, ancillary services, etc.). The second regulatory challenge has to do with the regulation of energy networks, because storage services may avoid the use of “regulated” networks. Consequently, network rules should allow them to compete in a technologically neutral manner.
    Keywords: Energy Storage Systems; Market Design; Network Regulation
    JEL: D23 D82 L51 L94
    Date: 2018
  3. By: Montt, Guillermo E.; Maître, Nicolas.; Amo-Agyei, Silas.
    Abstract: Electricity generation from renewable sources has been touted as a win-win solution for the advancement towards both environmental sustainability and decent work for all. This paper analyses the employment effects of electricity generation by different sources on a worldwide scale as observed since the year 2000. It finds that the additional generation from renewable, non-hydro, energy sources has been related to higher job creation in the electricity sector when compared to other energy sources, notably fossil fuel- based technologies. As predicted, renewables also help reduce GHG emissions. Estimating the economy-wide effects through employment multipliers provide more evidence that developing renewable energy has positive environmental and employment impact throughout the entire economy.
    Date: 2018
  4. By: Koutroumpis, Pantelis; Cave, Martin
    Abstract: We study the impact of spectrum auction design on the prices paid by telecommunications operators for two decades across 85 countries. Our empirical strategy combines information about competition in the local market, the level of adoption and a wide range of socio-economic indicators and process specific variables. Using a micro dataset of almost every mobile spectrum auction performed so far—both regional and national—we show that auction design affects final prices paid. Two designs (SMRA with augmented switching and CCA with core pricing) result in auctions with systematically higher normalized returns. Further, we document that spectrum ownership appears to affect prices paid in subsequent auctions. We discuss the mechanisms of cost minimization and foreclosure faced by operators in different regulatory environments. Our findings have implications for policy-makers and regulators.
    Keywords: Auction; Digital communications; Spectrum; Market power
    JEL: C78 D44 L96
    Date: 2018–06
  5. By: Mavisakalyan, Astghik; Tarverdi, Yashar
    Abstract: This paper investigates whether female political representation in national parliaments influences climate change policy outcomes. Based on data from a large sample of countries, we demonstrate that female representation leads countries to adopt more stringent climate change policies. We exploit a combination of full and partial identification approaches to suggest that this relationship is likely to be causal. Moreover, we show that through its effect on the stringency of climate change policies, the representation of females in parliament results in lower carbon dioxide emissions. Female political representation may be an underutilized tool for addressing climate change.
    Keywords: gender,political representation,climate change,environmental policy
    JEL: D70 J16 Q54 Q58
    Date: 2018
  6. By: Gürtzgen, Nicole; Nolte, André; Pohlan, Laura; van den Berg, Gerard J.
    Abstract: This paper studies effects of the introduction of a new digital mass medium on reemployment of unemployed job seekers. We combine data on high-speed (broadband) internet availability at the local level with individual register data on the unemployed in Germany. We address endogeneity by exploiting technological peculiarities in the network that affected the roll-out of high-speed internet. The results show that high-speed internet improves reemployment rates after the first months of the unemployment spell. This is confirmed by complementary analysis with individual survey data suggesting that online job search leads to additional formal job interviews after a few months in unemployment.
    Keywords: unemployment,online job search,information frictions,matching technology,search channels
    JEL: J64 K42 H40 L96 C26
    Date: 2018
  7. By: Gert Brunekreeft; Roland Meyer
    Abstract: An important goal of the European Commission is the promotion of the internal energy market (here specifically electricity), which requires sufficient and adequate cross-border interconnector capacity. However, cross-border interconnector capacity is scarce and, more importantly, the progress of interconnector capacity expansion is too slow. As a result, the Commission has proposed several policy measures to accelerate interconnector investment. This paper provides an overview of the policy debate on interconnector expansion and studies two particular points. First, the effects of network regulation on the interconnector investment and the policy proposals to improve the investment incentives, and more specifically, how to deal with risks. Second, we study the policies and effects of capacity remuneration mechanisms (CRMs) on the use of and the need for cross-border interconnector capacity.
    Keywords: electric utilities, regulation, market design, capacity remuneration mechanisms
    JEL: L94 L51
    Date: 2018–02
  8. By: Rohan Best; Paul J. Burke
    Abstract: We investigate if greater electricity availability helps countries ascend to faster economic growth trajectories. This is an important question for many developing countries that are currently prioritizing infrastructure investments. Using cross-sectional and panel regressions with national-level decadal data, we find some evidence that electricity availability has a significant effect on subsequent economic growth. However, much of the effect disappears once suitable controls are included. We examine various dimensions of electricity availability, including electricity consumption quantity, generation capacity, residential access rate, and quality of electricity supply. It appears that electricity availability is best viewed as something that can be scaled up as economies grow rather than something that imposes binding constraints on subsequent economic growth.
    Keywords: electricity availability, electricity consumption, economic growth, development economics
    JEL: O47 Q43 Q48
    Date: 2018–06
  9. By: Schlesewsky, Lisa; Winter, Simon
    Abstract: The increase in network costs within the German electricity grid, due to a rising share of renewable energy generation, has led to higher network charges in recent years. We use socioeconomic data in order to investigate distributional effects within the period 2010-2016, and employ three different inequality metrics - the Gini coefficient, the Theil index and the Atkinson index - all of which unambiguously indicate regressive effects of network charges. The three metrics show an increase of economic inequality of at least 0.6 % when accounting for network charges. This finding is due to 1. the relative inferiority of electricity, 2. the regressive impact of a fixed component of network charges, 3. considerable regional disparities, and 4. the higher prevalence of prosumers within high-income households.
    Keywords: network charges,renewable energies,economic inequality
    JEL: D63 Q40 Q42
    Date: 2018
  10. By: Pereira, Guillermo Ivan (University of Coimbra); Specht, Jan Martin (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Pereira da Silva, Patrícia (University of Coimbra); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: The ongoing European Union sustainable energy transition has a disruptive potential regarding the role of infrastructure and utilities in the electricity sector. The increased spread of digital technologies, renewable energy sources, and prosumers calls for a swift and well-guided adaptation of the electricity distribution industry towards a smart grids context. We analyze the challenges and opportunities associated with this adaptation through nine multi-stakeholder workshops, held in Germany and Portugal in 2016-2017, engaging distribution system operators (DSOs), researchers, academics, and integrated utility companies to obtain up-to-date insights. Our results indicate uncertainty regarding the value of large-scale rollout of smart meters for DSOs. Also, a corporate culture with resistance to change is observed, challenging the integration of novel technologies and processes. Traditional regulation is seen as a barrier to smart grid investments, is associated with job losses, and knowledge destruction. Policy-makers can benefit from these insights by taking them into account in policy design and market restructuring.
    Keywords: Electricity distribution; smart grid; technology; business model; market design; policy
    JEL: O18 O25 O33 Q41
    Date: 2018–03
  11. By: Shubhro Sarkar (Indira Gandhi Institute of Development Research); Suchismita Tarafdar (Shiv Nadar University)
    Abstract: In this paper we show that firms might get an additional strategic benefit from using marginal-cost-reducing investments in conjunction with a managerial incentive scheme. While both these instruments allow firms to \aggressively" participate in product market competition, we show that they act as strategic substitutes or complements depending on whether they are chosen simultaneously or sequentially under complete information. Given that the use of such instruments is inseparably linked with a Prisoner's Dilemma kind of situation, our analysis shows a way to mitigate such effects, through heir simultaneous use.
    Keywords: Strategic delegation, Cost-Reducing Investment, Strategic Substitutes, Strategic complements, Subgame perfection
    JEL: C72 L13 D43
    Date: 2018–03
  12. By: Angela Köppl (WIFO); Stefan Schleicher (WIFO)
    Abstract: One of the lessons learned from the German effort under the heading of Energiewende is the insight that simply shifting to renewables and recommending improving energy efficiency is not sufficient to lower greenhouse gas emissions. Combined with the expected radical change of technologies this requires a more profound understanding of our energy systems. Therefore, in contrast to most conventional approaches we propose a deepened structural analysis that covers the full energy value chain from the required functionalities for mechanical, thermal and specific electric energy services via application and transformation technologies up to primary energy. This deepened structural approach opens and substantially enhances our understanding of policy designs that are compatible with the Paris Agreement and Sustainable Development Goals. We discover the essential role of four energy grids, namely for electricity, heat, gas, and information as the key for integrating all components of a newly structured energy system. Consequently, we conclude that policy strategies focusing on individual components of an energy system as simply shifting to renewables may from a comprehensive perspective on sustainability in the worst case even turn out as counterproductive.
    Keywords: Sustainable energy systems, Energy value chain, Energy grids
    Date: 2018–06–14
  13. By: Rivers, Nicholas; Shaffer, Blake
    Abstract: This paper examines how climate change will affect both the level and timing of future electricity demand across Canada. Using an original dataset of hourly electricity demand across all Canadian provinces combined with household-level microdata on air conditioner ownership, we estimate temperature responsiveness including both the direct effect of temperature on demand for cooling services, as well as the indirect effect of increasing the stock of temperature-sensitive durables, such as air conditioners. We find only a small increase in total demand by end-century, although the result differs across provinces. The small aggregate result reflects the mitigating effect of rising temperature in a cold country such as Canada, whereby increases in electricity demand for air conditioning as summer temperatures rise is largely offset by reduced winter heating demand. Although we project limited change in overall electricity demand, we do project changes in the timing of demand, both seasonally and diurnally. In particular, we find seasonal peaks shift from winter to summer in most regions, as well as a large increase in intraday ramping requirements—the difference between minimum and maximum demand within a day—suggesting electricity systems of the future will place an even greater value on storage and flexibility.
    Keywords: Climate change, future electricity demand, diurnal shape
    JEL: Q40 Q47 Q54
    Date: 2018
  14. By: Gutierrez, German; Philippon, Thomas
    Abstract: Until the 1990's, US markets were more competitive than European markets. Today, European markets have lower concentration, lower excess profits and lower regulatory barriers to entry. We document this surprising outcome and propose an explanation using a model of political support. Politicians care about consumer welfare but also enjoy retaining control over industrial policy. We show that politicians from different countries who set up a common regulator will make it more independent and more pro-competition than the national ones it replaces. Our comparative analysis of antitrust policy reveals strong support for this and other predictions of the model.
    Date: 2018–06
  15. By: Gu, Yewen (Dept. of Business and Management Science, Norwegian School of Economics); Wallace, Stein W. (Dept. of Business and Management Science, Norwegian School of Economics); Wang, Xin (Dept. of Industrial Economics and Technology Management, Norwegian University of Science and Technology)
    Abstract: Global warming has become one of the most popular topics on this planet in the past decades, since it is the challenge that needs the efforts from the whole mankind. Maritime transportation, which carries more than 90% of the global trade, plays a critical role in the contribution of green house gases (GHGs) emission. Unfortunately, the GHGs emitted by the global fleet still falls outside the emission reduction scheme established by the Kyoto Protocol. Alternative solutions are therefore strongly desired. Several market-based measures are proposed and submitted to IMO for discussion and evaluation. In this paper, we choose to focus on one of these measures, namely Maritime Emissions Trading Scheme (METS). An optimization model integrating the classical fleet composition and deployment problem with the application of ETS (global or regional) is proposed. This model is used as a tool to study the actual impact of METS on fleet operation and corresponding CO2 emission. The results of the computational study suggest that in the short term the implementation of METS may not guarantee further emission reduction in certain scenarios. However, in other scenarios with low bunker price, high allowance cost or global METS coverage, a more significant CO2 decrease in the short term can be expected.
    Keywords: Maritime Emissions Trading Scheme; CO2 emissions; maritime fleet composition; deployment model
    JEL: C44 C60 Q50
    Date: 2018–06–27
  16. By: Fadoua Chiba; Sebastien Rouillon
    Abstract: We model a simplified electric market with producers using either conventional or intermittent electric generators and consumers equipped with either smart or traditional meters. We calculate the investment in intermittent technologies and smart meters in a social optimum. We find that the optimal penetration of smart meters is increasing in the volatility of the electric spot price. As a consequence, intermittent capacities and smart-meters are complement, only if the correlation existing between intermittent energy and demand is negative or if the capacity of intermittent generators is large enough. Otherwise, larger intermittent capacities actually help to decrease the volatility of the electric spot price, making smart-meters less useful. We also give a numeral application, calibrated to represent the French electric market in 2016 and policy objective for 2030. We show in particular that a general adoption of smart meters would be optimal only if the cost of installing and operating smart meters was unrealistically low.
    Keywords: Capacity choice, electricity, intermittency, renewable energy
    JEL: D24 D41 Q41 L11
    Date: 2018

This nep-reg issue is ©2018 by Natalia Fabra. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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