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on Regulation |
| By: | Soroush, G.; Cambini, C.; Jamasb, T.; Llorca, M. |
| Abstract: | It is generally accepted that institutions are important for economic development. However, whether the performance of regulated utilities within a country is affected by the quality of institutions is yet to be investigated thoroughly. We analyse how the quality of regional institutions impact performance of Italian electricity distribution utilities. We use a stochastic frontier analysis approach to estimate cost functions and examine the performance of 108 electricity distribution utilities from 2011 to 2015. This unique dataset was constructed with the help of the Italian Regulator for Energy, Networks, and Environment. In addition, we use a recent dataset on regional institutional quality in Italy. We present evidence that utilities in regions with better government effectiveness, responsiveness towards citizens, control of corruption, and rule of law, also tend to be more cost efficient. The results suggest that national regulators should take regional institutional diversity into account in incentive regulation and efficiency benchmarking of utilities. |
| Keywords: | Institutional quality; stochastic frontier analysis; electricity distribution in Italy; cost efficiency; inefficiency determinants |
| JEL: | D22 L51 L94 O43 |
| Date: | 2019–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1942&r=all |
| By: | Lukasz Grzybowski (Télécom ParisTech); Maude Hasbi (Télécom ParisTech); Julienne Liang (Orange Labs [Paris] - Telecom Orange) |
| Abstract: | We estimate a mixed logit model using data on choices of broadband technologies by 94,388 subscribers to a single broadband operator in a European country on a monthly basis from January to December 2014. We find that valuation of DSL connection speed in the range between 1 and 8 MB/s is very similar. Moreover, in January 2014, the valuation of FttH connection with speed of 100 MB/s is not much different than of DSL connection with speed of 1 or 8 MB/s but it increased over time. The small initial difference in valuation of DSL and FttH connections may be because basic Internet needs of consumers such as emailing, reading news, shopping, browsing and even watching videos online could be satisfied with connection speed below 8 MB/s. We also find that consumers face significant switching costs when changing broadband tariffs, which are substantially higher when switching from DSL to FttH technology. According to counterfactual simulations based on our model estimates, switching costs between technologies are the main factor which slows down transition from DSL to FttH. |
| Keywords: | FttH,DSL,connection speed,switching costs |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02102338&r=all |
| By: | Stef Proost; Mads Greaker; Cathrine Hagem (Statistics Norway) |
| Abstract: | Higher battery storage capacity in electric vehicles (EV) can potentially serve two purposes: First, the larger the capacity, the less need for inconvenient recharging during long trips. Second, the larger the capacity, the larger the potential gains from vehicle-to-grid (V2G) electricity supply during peak prices or during periods of imbalance. We present an analytical model for the intertwinement of the consumers’ choice of battery capacity and the potential for supplying power to the electricity market. We show that V2G increases the consumers’ choice of battery capacity, and it may reduce the cost of owning an EV vis-à-vis a traditional car. Furthermore, V2G alleviates the capacity pressure on peak hours, and thereby reduces the need for investment in backup power, saving social costs. Based on a future scenario for the Belgian electricity market, we provide a numerical illustration indicating that the savings may be substantial. |
| Keywords: | Electric vehicles; Vehicle-to-grid; V2G; Electricity market |
| JEL: | Q41 Q42 Q54 R42 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:903&r=all |
| By: | Bruno Lanz; Evert Reins |
| Abstract: | Imperfect information is widely acknowledged to hamper the adoption of energy efficient technologies. In this paper, we study supply-side implications of the associated incentive structure. We build on existing evidence suggesting that energy efficiency owns a credence component, whereby the supply side of the market has more information about what technology is best for consumers. The literature on credence goods markets suggests that informational advantage by an expert-seller leads to market inefficiencies, including low trade volume. We start by developing a simple framework to study supply-side incentives related to the provision of energy efficient technologies. We then document inefficiencies and potential remedies by discussing linkages between an empirical literature on credence goods and that on the market for energy efficiency. Doing so, we identify policy implications and research gaps that are relevant for the adoption of energy efficiency technologies. |
| Keywords: | Energy efficiency; Asymmetric information; Credence goods; Energy policy; Environmental externalities; Technology adoption. |
| JEL: | D18 D82 H23 Q41 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:irn:wpaper:19-03&r=all |
| By: | Matthew E. Oliver; Juan Moreno-Cruz; Ross C. Beppler |
| Abstract: | The rebound effect is a well-known behavioral response whereby potential energy savings from efficiency improvements are partially offset by increased consumption of energy services, as the marginal cost of energy services is reduced. This paper characterizes a similar rebound effect related to installation and operation of a residential photovoltaic (PV) system. This solar rebound effect is different from traditionally studied rebound effects, primarily because it is due not to an improvement in the energy efficiency of a household’s appliances, but to the supply of a zero-marginal-cost perfect substitute for grid electricity. The solar rebound effect is first derived in the absence of any subsidization mechanism. We then modify the model to account for two commonly implemented incentives: installation rebates and net metering. Rebates are shown to increase the rebound effect, whereas the effect of net metering depends on the per-unit compensation rate. |
| Keywords: | rebound effect, solar energy, residential photovoltaic systems, net metering, investment tax credit |
| JEL: | Q41 Q42 Q48 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7635&r=all |
| By: | Jaraite, Jurate (CERE - the Center for Environmental and Resource Economics); Kazukauskas, Andrius (CERE - the Center for Environmental and Resource Economics); Brännlund, Runar (CERE - the Center for Environmental and Resource Economics); Kiran, Chandra (CERE - the Center for Environmental and Resource Economics); Kriström, Bengt (CERE - the Center for Environmental and Resource Economics) |
| Abstract: | How can increasing intermittent power generation in the Swedish electricity system be managed in a more market-oriented and cost-efficient way? We argue that market mechanisms are the most natural means for obtaining the needed flexibility in electricity systems. We believe that a complete ex post assessment of the Swedish wholesale and balancing market functioning is crucial to determine the effectiveness of these markets in attaining their major objectives. This report identifies knowledge gaps and suggests the most relevant ex post research directions and questions for analysing the Swedish electricity markets in relation to intermittency and pricing flexibility. |
| Keywords: | electricity markets; intermittency; Sweden; wind power |
| JEL: | Q41 Q42 Q48 |
| Date: | 2019–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2019_005&r=all |
| By: | Emily Prehoda (MTU - Michigan Technological University); Joshua Pearce (MTU - Michigan Technological University); Chelsea Schelly (MTU - Michigan Technological University) |
| Abstract: | Because of its environmental damage and now often being the most expensive source for electricity production, coal use is declining throughout the United States. Michigan has no active coal mining and seemingly supportive legislation for distributed generation (DG) and renewable energy (RE) technologies. However, Michigan still derives approximately half of its power production from large centralized coal plants, despite the availability of much lower cost RE DG technologies. To understand this conundrum, this study reviews how Michigan investor owned utilities utilize their political power to perpetuate utility structures that work toward the financial interests of the utilities rather than the best interests of the state's electricity consumers, including other firms and residents. Background is provided covering the concept of DG, the cost savings associated with DG, and utility regulatory regimes at the national, regional, state, and local levels. Recent case studies from specific utility strategies are provided in order to illustrate how Michigan utilities manipulate regulatory regimes via policy misinterpretation to deter or hinder the proliferation of DG in favor of maintaining the existing interests in centralized, fossil fuel-based electrical energy production. The results of this study demonstrate how DG proliferation is hindered by Michigan regulated utilities via the exercise of political power within existing legal and regulatory regimes. This highlights the need to think about how utilities may interpret and implement rules when designing energy legislation and policy to maximize the benefits for consumers and society. Policy recommendations and alternate strategies are provided to help enhance the role of energy policy to improve rather than limit the utilization of RE DG. |
| Keywords: | utility regulation,electric utilities,distributed generation,energy policy,renewable energy |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02111345&r=all |
| By: | Ambrosius, M.; Egerer, J.; Grimm, A. V.; van der Weijde, A. |
| Abstract: | Ongoing policy discussions on the reconfiguration of bidding zones in European electricity markets induce structural uncertainty about the future market design. This paper deals with the question of how this structural uncertainty affects market participants and their long-run investment decisions in generation and transmission capacity. We propose a stochastic multilevel model, which incorporates generation capacity investment, network expansion and redispatch, taking into account uncertainty about the future market design. Using a stylized two-node network, we disentangle different effects that uncertainty has on market outcomes. Our results reveal that expectations about future market structures have an important effect on investment decisions. Unlike most parametric uncertainties, structural uncertainty about the future market design can have a positive effect on welfare, even if a market design change does not actually take place, although there are distributional effects. This also implies that the welfare gains of a change to a more efficient market design are lower if market participants already anticipate this change. |
| Keywords: | Electricity, investment, structural uncertainty, market design, bidding zones, nodal pricing |
| JEL: | D80 L51 Q41 Q48 |
| Date: | 2019–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1943&r=all |
| By: | Daniel Nachtigall |
| Abstract: | This paper presents the potential benefits and challenges of enhanced international co-ordination on carbon pricing and outlines the different types and levels of co-ordination that are available for national and sub-national governments. These levels include, inter alia, facilitating new pricing schemes, phasing out inefficient fossil fuel subsidies, sectoral approaches, co-ordination on minimum carbon prices and carbon pricing clubs. Jurisdictions may want to adopt several of these options simultaneously and may co-ordinate at multiple levels of government or across countries and sectors. This creates a bottom-up ‘web of carbon pricing schemes’, which can be an important element in delivering the Nationally Determined Contributions of the Paris Agreement and which has the potential to support greater levels of climate action and ambition. |
| Keywords: | Carbon clubs, Carbon markets, Carbon pricing, International co-operation, Sectoral agreements |
| JEL: | H23 Q54 Q56 Q58 |
| Date: | 2019–05–22 |
| URL: | http://d.repec.org/n?u=RePEc:oec:envaaa:147-en&r=all |
| By: | Newbery, D.; Gissey, G.; Guo, B.; Dodds, P. |
| Abstract: | Interconnectors have increasing value for Britain in providing access to cheaper Continental power, security of supply, and managing increased renewables penetration. Their value has induced proposals for substantial new interconnectors. The EU Target Electricity Model requires interconnector market coupling via Day Ahead and IntraDay Markets. We examine the efficiency and value of uncoupled and coupled trading for the four DC interconnectors to GB, over different timescales ranging from over a year ahead to intraday, and the social benefits that are not reflected in the private benefits. IFA and BritNed have a commercial value of about €525 million/yr. The island of Ireland coupled on 1 Oct 2018, dramatically reducing trading inefficiency. Because the GB carbon tax is not replicated abroad it transfers some €40 million/yr to the foreign share of IFA and BritNed as well as adding distortionary costs when trade flows change. The policy implication is that while further investment in interconnectors appears socially profitable, it is important to harmonise carbon taxes across the EU. If GB leaves the EU and is uncoupled, some of these trading gains would be sacrificed, but other financial markets may alleviate the cost of Brexit, making policies to enhance liquidity desirable. |
| Keywords: | Interconnectors, market coupling, hedging, private and social cost |
| JEL: | C54 D40 D44 F14 H23 L94 Q48 |
| Date: | 2019–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1941&r=all |
| By: | Nordin, Martin (Department of Economics, Lund University); Grenestam , Erik (Department of Economics, Lund University); Gullstrand , Joakim (Department of Economics, Lund University) |
| Abstract: | This study investigates the relationship between super-fast broadband and firms’ sales and employment level in Sweden. It is important to learn more about this recent technological change and few studies has explored the impact of super-fast broadband on firm outcomes. We use the previous roll-out of second-generation internet access to identify the effect of third-generation internet access. The early investments in optic fiber where largely core broadband network investments paving the way for later investments in third-generation broadband technology. Municipalities choosing providers who prioritized cheap technology (broadband over telephone lines, DSL) targeting the many, thus fell behind municipalities choosing providers investing in optic fiber. We find heterogeneity in the broadband effect, but the overall effect is negative. This effect may be associated with the roll-out of 4G mobile broadband in 2011; mobile broadband services are a byproduct of optic fiber because mobile broadband is transmitted from the same high capacity fiber-optic base stations. We suggest that the negative effect found is related to internet use at work and the mixing of private and work related internet use. |
| Keywords: | broadband; optic fiber; firm output; employment; regional analysis |
| JEL: | D22 J23 O30 R50 |
| Date: | 2019–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2019_008&r=all |
| By: | Gillingham, Kenneth; Houde, Sebastien; Van Benthem, Arthur |
| Abstract: | A central question in the analysis of fuel-economy policy is whether consumers are myopic with regards to future fuel costs. We provide the first evidence on consumer valuation of fuel economy from a natural experiment. We examine the short-run equilibrium effects of an exogenous restatement of fuel-economy ratings that affected 1.6 million vehicles. Using the implied changes in willingness-to-pay, we find that consumers act myopically: consumers are indifferent between $1 in discounted fuel costs and 15-38 cents in the vehicle purchase price when discounting at 4%. This myopia persists under a wide range of assumptions. |
| Keywords: | fuel economy; myopia; regulation; Undervaluation; Vehicles |
| JEL: | D12 H25 L11 L62 L71 Q4 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13736&r=all |