|
on Regulation |
| By: | Gavard, Claire; Voigt, Sebastian; Genty, Aurélien |
| Abstract: | While emissions trading schemes are developed by nations to mitigate their greenhouse gas emissions, behavioural studies have shown that the political and public acceptability of these market-based instruments depends on the way the associated revenues are used. One option the general public approves of is to use them to support renewable energy. If this consists in reducing a pre-existing electricity levy that heterogeneously applies to the various sectors of the economy, the reduction of this distortionary tax thanks to the carbon revenues results in general equilibrium effects that may have unequal sectoral impacts. This is what we examine in the case of the European Union. With a modelling approach including a detailed disaggregation of European sectors, we find that using auction revenues from the Emissions Trading Scheme (ETS) to support electricity generation from renewable sources results in a 2% rise in electricity demand in the whole economy due to the reduced electricity levy that electricity consumers have to pay to support renewable energy. This results in a 1.8% ETS carbon price increase. The carbon constraint for the non-ETS sectors is 5.9% looser as a consequence of the larger electricity use by these sectors. While the energy intensive sectors generally benefit from electricity levy exemptions, we observe that, due to the energy and ETS price increase, the combination of these exemptions and of the use of carbon auction revenues to support renewable energy makes the ETS sectors worse off than if carbon revenues are transferred to households. In aggregate, the recycling option analysed here results in a GDP gain due to its impacts on the non-ETS sectors, the reduction of the electricity levy and associated distortionary effects. |
| Keywords: | carbon auctions,renewable energy support,electricity levy,emissions trading scheme,revenues recycling |
| JEL: | C68 E62 H21 H23 Q42 Q54 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:18058&r=all |
| By: | Srinuan, Pratompong; Phansatarn, Thunwar; Srinuan, Chalita |
| Abstract: | Spectrum auction has been accepted as an efficient tool for allocating the radio spectrum and increasing competition level among service providers in the telecommunication market. Most of National Regulatory Authorities (NRAs) use spectrum cap as an incentive instrument to facilitate new entrants and to reduce a chance of natural monopoly in acquiring spectrum. These two different regulatory instruments seem to provide contradictory results. On one hand spectrum auction should allow Mobile Network Operator (MNO) to obtain as much as spectrum bandwidth. It may lead to one MNO may gain most of spectrum bandwidth in the market or being a dominant player in the market. On another, spectrum cap limits amount of bandwidths where the MNO could obtain. It aims to provide an opportunity to smaller and/or new comer operator to gain spectrum bandwidths as well as its competitive advantage. The National Broadcasting and Telecommunications Commission (NBTC) has followed the practices from other NRAs by implementing spectrum auctions together with setting spectrum cap for each bidder in an event of auction. This paper aims to investigate impact on firms' performance, i.e. data share to spectrum share ratio, subscriber share to spectrum share ratio, etc., in Thailand. The findings show that 40% sub-1GHz cap produces a better output in term of spectrum efficiency. It is somehow contrast with other studies. However, this may result from a long term implementation of spectrum cap. Mobile operator needs to prepare itself to handle the limitation of spectrum. |
| Keywords: | Spectrum cap,Firms' performance,Thailand |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itsb18:190401&r=all |
| By: | Quentin Hoarau; Yannick Perez |
| Abstract: | Distributed Energy Resources (DERs), mostly in the form of solar photovoltaic (PV) or lithium-ion batteries, and electric vehicles (EVs) are emerging as three disruptive innovations in power grids. Recent studies have pointed out the potential synergies between these technologies, while others have studied the difficulty to design adequate network tariff when some consumers can adopt DERs (prosumers). In this paper, we fill gaps in both strands of the literature by investigating the combined effect of DERs and EVs on grid cost recovery. To study these effects, we use a bi-level model that captures the conflict between a regulator and the network users. In the lower level, prosumers canreact to tariff changes by installing DERs and by adapting their EV charging. In the upper level, the regulator sets network tariffs by enforcing the total grid costs recovery and anticipating the prosuming behaviors of network users. We study how the levels of EV penetration and prosuming affect tariffs. The influence of the tariff structure is also investigated. First, we find that grid cost recovery concerns caused by load-defecting prosumers installing DER can be balanced by the diffusion of EVs in the network. Second, we highlight that EVs and DERs adoptions are conflicting through the network tariff design. In particular, we find that the more a tariff structure gives incentives for DERs, the less beneficial it is for EVs, and viceversa. |
| Keywords: | Network tariff design, Electric vehicles, Prosumers, Solar PV, Distributed energy resources |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:cec:wpaper:1810&r=all |
| By: | Kumar Sunil; Jayaswal, Sachin; Garg, Amit |
| Abstract: | Optimization of charging infrastructure for electric buses is critical for the transition from conventional buses to electric buses since chargers, especially for chargers since they constitute almost two-thirds of the total charging infrastructure costs. Different modeling frameworks to optimize the charging capacity are developed separately for the depot charging and opportunity charging and tested for the transit network of Navi Mumbai Municipal Transport (India). The models determine the optimal number and capacity of chargers such that the existing bus operational schedules are maintained – a prime requirement of bus operators. Since the route coverage per bus per day would require en-route charging, the opportunity charging model determines the optimal locations for installing these chargers. A sensitivity analysis is also conducted to analyze the effects of the specific energy consumption of the buses and their rated battery capacity on charger selection. These models are first of their kind to be used for electric bus adoption in India. Keywords: Electric bus, charging infrastructure, charging schedule, cost optimization modeling, public transit networks |
| Date: | 2018–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:14598&r=all |
| By: | Osorio, Sebastian; Pietzcker, Robert Carl; Pahle, Michael; Edenhofer, Ottmar |
| Abstract: | Germany has an ambitious climate target for 2030 that cannot be achieved without reducing the high share of coal in power generation. In the face of this, the country has set up a commission to phase out coal. A UK-style carbon price floor is one of the options being considered. Yet implementing such a policy comes with important risks related to the following two aspects: (1) the price level necessary to reduce emissions to reach the 2030 climate target; and (2) the waterbed effect that arises from such a policy under the EU Emissions Trading Scheme (ETS) cap. In this paper, we quantify these risks using the numerical electricity market model LIMES-EU, and consider their implications as well as different options for dealing with them. Our results show that under baseline assumptions a carbon price floor of around 33 €/tCO2 would be sufficient to reach the 2030 target. Under unfavourable conditions, an appropriate price floor may be nearly twice as high (57 €/tCO2). The waterbed effect and related risks for the EU ETS could be reduced substantially in the mid-term (2030) through the recently introduced cancellation of allowances through the Market Stability Reserve (MSR), or through a larger coalition of countries. Germany could even fully alleviate the waterbed effect by cancelling 1.1 GtCO2 of certificates. In the long-term (until 2050), emission reductions leading up to 2030 would be almost completely (91%) offset at the EU level. Accordingly, it is essential that the national price initiates a policy sequence that leads to the EU level. |
| Keywords: | EU ETS,carbon price floor,carbon price,coal phase-out,interaction,waterbed effect |
| JEL: | L94 Q58 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:190771&r=all |
| By: | Helgeson, Broghan (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)); Peter, Jakob (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)) |
| Abstract: | Despite regulation efforts, CO2 emissions from European road transport have continued to rise. Increased use of electricity offers a promising decarbonization option, both to fuel electric vehicles and run power-to-x systems producing synthetic fuels. To understand the economic implications of increased coupling of the road transport and electricity sectors, an integrated multi-sectoral partial-equilibrium investment and dispatch model is developed for the European electricity and road transport sectors, linked by an energy transformation module to endogenously account for, e.g., increasing electricity consumption and flexibility provision from electric vehicles and power-to-x systems. The model is applied to analyze the effects of sector-specific CO2 reduction targets on the vehicle, electricity and ptx technology mix as well as trade flows of ptx fuels in European countries from 2020 to 2050. The results show that, by 2050, the fuel shares of electricity and ptx fuels in the European road transport sector reach 37% and 27%, respectively, creating an additional electricity demand of 1200 TWh in Europe. To assess the added value of the integrated modeling approach, an additional analysis is performed in which all endogenous ties between sectors are removed. The results show that by decoupling the two sectors, the total system costs may be significantly overestimated and the production costs of ptx fuels may be inaccurately approximated, which may affect the merit order of decarbonization options. |
| Keywords: | Energy system modeling; electricity sector; road transport; Power-to-X; synthetic fuels; sector coupling; decarbonization |
| JEL: | C61 N70 Q41 Q42 Q48 R42 |
| Date: | 2019–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2019_001&r=all |
| By: | Lucas Davis; Sebastián Martínez; Bibiana Taboada |
| Abstract: | This paper evaluates a field experiment in Mexico in which a quasi-experimental sample of new homes was provided with insulation and other energy efficient upgrades. A novel feature of our study is that we deploy large numbers of data loggers which allow us to measure temperature and humidity at high frequency inside homes. We find that the upgrades had no detectable impact on electricity use or thermal comfort, and this is true both in summer and non-summer months. These results stand in contrast to the engineering estimates that predicted up to a 26% decrease in electricity use. Part of the explanation is that air conditioner ownership is lower than expected, thus reducing the potential for reductions in energy use. In addition, we document that most households have their windows open on hot days, nullifying the thermal benefits of roof and wall insulation. |
| Keywords: | Air Conditioning, Thermal comfort, Energy demand, Energy efficiency, Energy Efficiency, Energy Demand, Thermal Comfort, Air Conditioning |
| JEL: | H23 Q54 D12 Q40 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:8767&r=all |
| By: | Aurélien Saussay (CIRED & OFCE, Sciences Po, Paris); Misato Sato (Grantham Research Institute on Climate Change and the Environment, LSE) |
| Abstract: | This paper analyzes the role of energy prices in firms’ investment location decisions in the manufacturing sector. Building on the application of discrete choice theory to the firm location problem, we specify a conditional logit model linking bilateral foreign direct investment (FDI activity to relative energy prices. We then empirically test this link using a global dataset of M&A deals in the manufacturing sector covering 41 countries between 1995 and 2014, using econometric techniques adapted from the estimation of gravity models. The results suggest that upon deciding to invest, firms are attracted to regions that have lower energy prices. However, counterfactual simulations reveal that unilateral implementation of a $50/tCO2 carbon tax by various coalitions of countries is expected to have limited negative impact on the attractiveness of economies to foreign industrial investments. Hence, our results support the pollution haven effect, but find the magnitude is limited and could be addressed with targeted measures in the most energy intensive sectors. |
| Keywords: | FDI, Mergers and Acquisitions, energy prices, firm location, competitiveness impacts, carbon leakage |
| JEL: | F21 H23 Q52 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2018.21&r=all |
| By: | Herweg, Fabian (University of Bayreuth); Schmidt, Klaus (LMU Munich) |
| Abstract: | We consider a multi-dimensional procurement problem in which sellers have private information about their costs and about a possible design flaw. The information about the design flaw is necessarily correlated. We solve for the optimal Bayesian procurement mechanism that implements the efficient allocation under the constraint that sellers are protected by limited liability. We show that the rents obtained from reporting costs truthfully can be used to reduce the rents sellers must get for reporting the flaw. We compare the optimal Bayesian mechanism to the optimal ex post incentive compatible mechanism that is informationally less demanding. |
| Keywords: | auctions; correlated types; inefficient renegotiation; multidimensional screening; procurement; ; |
| JEL: | D44 D82 H57 |
| Date: | 2018–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:133&r=all |
| By: | Reed, David P. |
| Abstract: | This paper examines the question of whether the local access network environment stands on the cusp of significant change, one characterized by investment in new Gigabit broadband networks operated by a new breed of service providers. The highprofile Google Fiber project first deployed in the Kansas City metro area in 2012, soon followed by the more limited progress of the project in 2016, poses the strategic question of whether Google has "cracked the code" to identify and develop a viable business model for overbuilding local access networks. Based on a "top-down" estimate of the potential costs of deployment, this analysis finds that four business-model innovations pursued by Google, and now other players, can improve the economics of new network deployment to a significant degree under some realistic conditions, and, lacking any response from incumbents, therefore would improve the prospects for new entry of service providers in some areas. Incumbent broadband providers, however, are forming competitive responses that are substantially boosting the speed of their own broadband services in areas where Google Fiber is being deployed. The key takeaway from this analysis is that whether deployed by new entrants or incumbents, the "provein" point for Gigabit broadband networks is becoming lower, with the result that this technology will likely be deployed on an increasing basis in those areas where residential broadband consumers demonstrate a strong demand for the Gigabit service. One of the key policy issues raised by this outcome is the degree to which policy makers are comfortable with the resulting patchwork of fiber network deployment throughout a geographic region. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itsb18:190415&r=all |
| By: | Holmberg, Pär (Research Institute of Industrial Economics (IFN)); Tangerås, Thomas (Research Institute of Industrial Economics (IFN)); Ahlqvist, Victor (Research Institute of Industrial Economics (IFN)) |
| Abstract: | In centralized markets, producers submit detailed cost data to the day-ahead market, and the market operator decides how much should be produced in each plant. This differs from decentralized markets that rely on self-commitment and where producers send less detailed cost information to the operator of the day-ahead market. Ideally centralized electricity markets would be more effective, as they consider more detailed information, such as start-up costs and no-load costs. On the other hand, the bidding format is rather simplified and does not allow producers to express all details in their costs. Moreover, due to uplift payments, producers have incentives to exaggerate their costs. As of today, US has centralized wholesale electricity markets, while most of Europe has decentralized wholesale electricity markets. The main problem with centralized markets in US is that they do not provide intra-day prices which can be used to continuously up-date the dispatch when the forecast for renewable output changes. Intra-day markets are more flexible and better adapted to deal with renewable power in decentralized markets. Iterative intra-day trading in a decentralized market can also be used to sort out coordination problems related to non-convexities in the production. The downside of this is that increased possibilities to coordinate increase the risk of getting collusive outcomes. Decentralized day-ahead markets in Europe can mainly be improved by considering network constraints in more detail. |
| Keywords: | Wholesale electricity markets; Market clearing; Centralization; Decentralization; Unit-commitment; Self-dispatch |
| JEL: | D44 L13 L94 |
| Date: | 2018–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1257&r=all |
| By: | Ali Kakhbod; Asuman Ozdaglar; Ian Schneider |
| Abstract: | We offer a parsimonious model to investigate how strategic wind producers sell energy under stochastic production constraints, where the extent of heterogeneity of wind energy availability varies according to wind farm locations. The main insight of our analysis is that increasing heterogeneity in resource availability improves social welfare, as a function of its effects both on improving diversification and on reducing withholding by firms. We show that this insight is quite robust for any concave and downward-sloping inverse demand function. The model is also used to analyze the effect of heterogeneity on firm profits and opportunities for collusion. Finally, we analyze the impacts of improving public information and weather forecasting; enhanced public forecasting increases welfare, but it is not always in the best interests of strategic producers. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1812.11420&r=all |
| By: | Falch, Morten; Henten, Anders |
| Abstract: | This paper examines the impact of substitution of postal services with electronic communications and how this challenges the possibilities to maintain ubiquitous postal services with universal coverage. Denmark is used as an example, as this is one of the leading countries with regard to implementation of substitution of postal services with electronic communications. Postal service is a public utility like telecom, electricity, railways etc., and the postal sector has been subject to the same kind of market reforms, as those seen within other public utility sectors. These include the introduction of more competition and privatization. Within the EU, the guidelines for such reforms were formulated in the Green Paper on postal services (EU, 1991) From an institutional point of view, postal and telecom services have been closely related, as they have been part of the same public entity (the former PTTs). The first step in the telecom reform was in many countries to separate postal and telecom services, as telecom was considered better suited to be provided on market-based conditions, and to avoid cross subsidization from telecom to postal services. However, the point of departure for the two sectors is very different. While telecom in general is a profitable business, public subsidies have been necessary to ensure the provision of postal services. In addition, the basic service of letter distribution is challenged by digital alternatives... |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itsb18:190416&r=all |
| By: | Simshauser, P. |
| Abstract: | An intriguing characteristic of Australian energy market policymaking is the almost exclusive focus on spot market dynamics. The policy development cycle displays a virtual disregard for, and of, power system financial markets. The irony is that forward contract prices form the defining wholesale price input to end-user consumer tariffs. In this article, the impacts of a wide-ranging program of government-initiated CfDs on power system financial markets are analysed. Government-initiated CfDs are highly effective in correcting market failures, but they need to be used judiciously because – while they add to demand-side liquidity, they simultaneously extract supply-side forward contract market liquidity. Consequently, when used en-masse in loosely interconnected energy-only markets, CfDs have pro-competitive effects in the spot market by introducing ‘quasi-market participants’ but damage power system financial markets via the loss of liquidity. Power system modelling in this article demonstrates that a wide-ranging policy of government-initiated CfDs can produce shortages of ‘primary issuance’ hedge contact supply. This is far more than theory. In the South Australian region of the NEM, shortages of primary-issuance hedge contract supply have arisen through renewable entry and coal plant exit. Hedge shortages have had the effect of raising forward contract price premiums above efficient levels, needlessly forced the most price-elastic (Industrial/Manufacturing) customers into accepting unwanted spot market exposures, and unintentionally foreclosed non-integrated (2nd tier) energy retailers, all of which ultimately harms consumer welfare. CfDs have a targeted role to play in energy markets by correcting market failure; but broad-based market mechanisms are preferred. |
| Keywords: | Variable Renewable Energy, Contracts-for-Differences, Hedge Contracts |
| JEL: | D52 D53 G12 L94 Q40 |
| Date: | 2019–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1901&r=all |
| By: | Erich Muehlegger; David S. Rapson |
| Abstract: | Little is known about demand for EVs in the mass market. In this paper, we exploit a natural experiment that provides variation in large EV subsidies targeted at low- and middle-income households in California. Using transaction-level data, we estimate two important policy parameters using triple differences: the subsidy elasticity of demand for EVs and the rate of subsidy pass-through. Estimates show that demand for EVs amongst low- and middle-income households is price-elastic and pass-through is complete. We use these estimates to calculate the expected subsidy bill required for California to reach its goal of 1.5 million EVs by 2025. |
| JEL: | H22 H23 H71 L62 Q48 Q55 Q58 R48 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25359&r=all |
| By: | Timothy N. Cason; Frans P. de Vries |
| Abstract: | This study employs a laboratory experiment to assess the performance of tradable permit markets on dynamic efficiency arising from cost-reducing investment. The permit allocation rule is the main treatment variable, with permits being fully auctioned or grandfathered. The experimental results show significant investment under both allocation rules in the presence of ex ante uncertainty over the actual investment outcome. However, auctioning permits generally provides stronger incentives to invest in R&D, leading to greater dynamic efficiency compared to grandfathering. |
| Keywords: | Pollution permits; Allowance auction; Grandfathering; Investment incentives; Stochastic R&D; Laboratory experiments |
| JEL: | C91 D80 O31 Q55 Q58 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1313&r=all |
| By: | Kenichi Mizobuchi (Matsuyama University); Hiroaki Yamagami (Seikei University) |
| Abstract: | Time-saving (time-efficient) goods and services are increasingly developed and diffused. Such goods and services increase the disposable time for households, and the time saved may be allocated to other activities consuming energy/electricity. The present study sets a simple theoretical model and shows a mechanism, called the time rebound effect, with which time-saving goods increase energy consumption through household behaviors. Furthermore, we reveal empirical evidence for this model by conducting a Japanese household survey. In particular, our analysis shows that the time rebound effect occurs on using the dishwasher, clothes dryer, or a net ordering/delivery service. However, its impact is very small: the extra electricity usage is about 1.4% of the daily usage at most. |
| Keywords: | Time rebound effect, Households, Electricity consumption, Time allocation, Energy |
| JEL: | D11 D13 Q4 Q5 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2018.20&r=all |
| By: | Micha{\l} Narajewski; Florian Ziel |
| Abstract: | In the following paper we analyse the ID$_3$-Price on German Intraday Continuous Electricity Market using an econometric time series model. A multivariate approach is conducted for hourly and quarter-hourly products separately. We estimate the model using lasso and elastic net techniques and perform an out-of-sample very short-term forecasting study. The model's performance is compared with benchmark models and is discussed in detail. Forecasting results provide new insights to the German Intraday Continuous Electricity Market regarding its efficiency and to the ID$_3$-Price behaviour. The supplementary materials are available online. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1812.09081&r=all |
| By: | Hannesson, Rögnvaldur (Dept. of Economics, Norwegian School of Economics) |
| Abstract: | Production of a renewable substitute to fossil fuels is modeled as causing the cost of this backstop technology to fall over time in proportion to the scale of the substitute production and how long it has been in use. The unit cost of resource extraction is assumed to rise as the stock is depleted, so learning by doing will increase the reserves permanently left in the ground. The green paradox can nevertheless be present, in the sense that the resource extraction path can initially lie above what it would be in the absence of a parallel production of renewable energy. In a monopolistic market, the resource monopolist’s optimal price path is two-phased, even with inelastic demand. In the limit-pricing phase, the price is falling, due to the progressive learning by doing effect, and the extraction path is rising. |
| Keywords: | Green Paradox; carbon dioxide emission; fossil fuels |
| JEL: | Q00 Q31 Q54 |
| Date: | 2018–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2018_017&r=all |
| By: | Simshauser, P.; Gilmore, J. |
| Abstract: | In theory, well designed electricity markets should deliver an efficient mix of technologies at least-cost. But energy market theories and energy market modelling are based upon equilibrium analysis and in practice electricity markets can be off-equilibrium for extended periods. Near-term spot and forward contract prices can and do fall well below, or substantially exceed, relevant entry cost benchmarks and associated long run equilibrium prices. However, given sufficient time higher prices, on average or during certain periods, create incentives for new entrant plant which in turn has the effect of capping longer-dated average spot price expectations at the estimated cost of the relevant new entrant technologies. In this article, we trace generalised new entrant benchmarks and their relationship to spot price outcomes in Australia’s National Electricity Market over the 20-year period to 2018; from coal, to gas and more recently to variable renewables plus firming, notionally provided by – or shadow priced at – the carrying cost of an Open Cycle Gas Turbine. This latest entry benchmark relies implicitly, but critically, on the gains from exchange in organised spot markets, using existing spare capacity. As aging coal plant exit, gains from exchange may gradually diminish with ‘notional firming’ increasingly and necessarily being met by physical firming. At this point, the benchmark must once again move to a new technology set. |
| Keywords: | Variable Renewable Energy, Electricity Prices, Power System Planning |
| JEL: | D61 L94 L11 Q40 |
| Date: | 2018–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1875&r=all |