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on Regulation |
| By: | Mario Mureddu; Hildegard Meyer-Ortmanns |
| Abstract: | An increase in energy production from renewable energy sources is viewed as a crucial achievement in most industrialized countries. The higher variability of power production via renewables leads to a rise in ancillary service costs over the power system, in particular costs within the electricity balancing markets, mainly due to an increased number of extreme price spikes. This study focuses on forecasting the behavior of price and volumes of the Italian balancing market in the presence of an increased share of renewable energy sources. Starting from configurations of load and power production, which guarantee a stable performance, we implement fluctuations in the load and in renewables; in particular we artificially increase the contribution of renewables as compared to conventional power sources to cover the total load. We then forecast the amount of provided energy in the balancing market and its fluctuations, which are induced by production and consumption. Within an approach of agent based modeling we estimate the resulting energy prices and costs. While their average values turn out to be only slightly affected by an increased contribution from renewables, the probability for extreme price events is shown to increase along with undesired peaks in the costs. |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1612.05525&r=reg |
| By: | Danielle Devogelaer; Benoît Laine |
| Abstract: | In this paper, the impact of a nuclear downtime and subsequent restart on wholesale electricity prices on the Belgian power exchange is investigated by means of a dual methodology. First, publicly available market data is used to construct a stable statistical model that is deployed to examine the effect of nuclear power generation variations on market price outcomes. Quantifying this phenomenon, also called the merit-order effect, with the aid of econometric methods translates into an esti-mated price decrease of around 10 €/MWh for a nuclear capacity hike of 2.5 GW. The importance and impact of the openness of the Belgian market, that is, its strong reliance on cross-border energy exchanges is highlighted. Next to this empirical evidence, the optimisation tool Crystal Super Grid is used to assess the impact of the resumed availability of the nuclear reactors on several indicators characterising the Belgian and European power landscape. A positive effect on overall welfare, consumer surplus and CO2 emissions can be noticed. As regards prices, this analysis confirms the negative merit-order effect which is calculated to equal, on average over a year, 3.8 €/MWh. Nevertheless, temporary hourly excesses of 30 €/MWh can occur. The paper then describes the possible causes of divergence between the two approaches.Our findings have important policy implications as they demonstrate the need to take the downward influence of prolonged nuclear power generation on wholesale prices into consideration when revising the (timetable in the) nuclear phase-out law since it may have a delaying effect on the compulsory energy transition towards a low-carbon economy. |
| Keywords: | Electricity, Energy policy, Econometric model |
| JEL: | C51 L94 Q41 |
| Date: | 2016–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:fpb:wpaper:1609&r=reg |
| By: | Mathias Reynaert; James M. Sallee |
| Abstract: | Firms sometimes comply with externality-correcting policies by gaming the measure that determines policy. We show theoretically that such gaming can benefit consumers, even when it induces them to make mistakes, because gaming leads to lower prices by reducing costs. We use our insights to quantify the welfare effect of gaming in fuel-consumption ratings for automobiles, which we show increased sharply following aggressive policy reforms. We estimate a structural model of the car market and derive empirical analogs of the price effects and choice distortions identified by theory. We find that price effects outweigh distortions; on net, consumers benefit from gaming. |
| JEL: | H2 L5 Q5 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22911&r=reg |
| By: | Pyddoke , Roger (VTI) |
| Abstract: | The purpose of this paper is to review the modelling used for the planning of infrastructure and design of policy instruments for transport in cities in Scandinavia, and to survey elasticities of transport demand with respect to policy instruments and important background variables. There are a number important objectives governing policy, maximizing welfare, reducing CO2 and other emissions, curbing congestion on roads and crowding in public transport in cities and improving the conditions for walking and cycling. The current transport demand models in Sweden and Norway were originally built to serve the purpose of forecasting for national infrastructure planning, primarily outside cities. They were not designed to represent the adaption of car use, congestion on roads or crowding in public transport or the effects of improving of conditions for walking and cycling. Therefore, recent discussions on the needs to develop planning for cities has raised these issues. The central results from the survey of effects are that, car use is shown to be more price sensitive in urban than in rural areas, and larger the larger the city. Although the benefits of a given congestion charging system are considerably and non-linearly dependent on initial congestion levels, traffic effects and adaptation costs are surprisingly stable across transport system modifications. car and energy use in many cross-sectional studies. The idea that density could induce |
| Keywords: | Traffic |
| JEL: | R40 |
| Date: | 2016–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2016_029&r=reg |
| By: | Boom, Anette (Department of Economics, Copenhagen Business School) |
| Abstract: | This paper examines the effect of bid regulations on the range of potential equilibrium prices in a multi-unit uniform price auction with heterogenous bidders. General bid caps destroy equilibria with prices above the bid cap and create new equilibria with prices way below the cap. A cap only for larger firms does not guarantee market prices below that cap. A sufficiently high bid floor only for smaller firms destroys some or all pure strategy equilibria despite their prices being above the bid floor. With a general bid floor this happens only with considerably higher bid floors. |
| Keywords: | Multi-unit Auctions; Heterogenous Bidders; Bid Regulation |
| JEL: | D43 D44 L12 L13 L51 |
| Date: | 2016–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2016_001&r=reg |
| By: | Declan Conway; Antoine Dechezlepretre; Ivan Haščič; Nick Johnstone |
| Abstract: | This paper identifies over 50 000 patents filed worldwide in various water-related technologies between 1990 and 2010, distinguishing between those related to availability (supply) and conservation (demand) technologies. Patenting activity is analysed – including inventive activity by country and technology, international diffusion of such water-related technologies, and international collaboration in technology development. Three results stand out from our analysis. First, although inventive activity in water-related technologies has been increasing over the last two decades, this growth has been disproportionately concentrated on supply-side technologies. Second, whilst 80% of water-related invention worldwide occurs in countries with low or moderate water scarcity, several countries with absolute or chronic water scarcity are relatively specialized in water efficiency technologies. Finally, although we observe a positive correlation between water scarcity and local filings of water patents, some countries with high water availability, in particular Switzerland or Norway, nevertheless appear as significant markets for water-efficiency technologies. This suggests that drivers other than local demand, like regulation and social and cultural factors, play a role in explaining the global flows of technologies. And finally, the extent to which innovation is "internationalised" shows some distinct patterns relative to those observed for innovation in technologies in general. |
| Keywords: | water security; resource scarcity; invention; international technology diffusion |
| JEL: | Q25 Q31 Q55 |
| Date: | 2015–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:62607&r=reg |
| By: | Nachtigall, Daniel |
| Abstract: | The allocation of free allowances for firms belonging to the carbon leakage list of the European Union Emissions Trading Scheme (EU ETS) was found to lead to substantial overcompensation, which is why some stakeholders recently have called for a phasing out of free allowances in the near term. This paper analyzes the consequences of phasing out free allowances in a dynamic two-period model when one group of countries unilaterally implements climate policies such as an emissions trading scheme. A carbon price induces firms to invest in abatement capital, but may also lead to the relocation of some firms. The social planner addresses the relocation problem by offering firms transfers, i.e. free allowances, conditional on maintaining the production in the regulating country. If transfers are unrestricted in both periods, then the social planner can implement the first best by setting the carbon price equal to the marginal environmental damage and using transfers to prevent any relocation. However, if transfers in the future period are restricted, it is optimal to implement a declining carbon price path with the first period price exceeding the marginal environmental damage. A high carbon price triggers investments in abatement capital and thus creates a lock-in effect. With a larger abatement capital stock, firms are less affected by carbon prices in the future and therefore less prone to relocate in the second period where transfers are restricted. |
| Keywords: | unilateral climate policy,relocation,lock-in effect,rebating |
| JEL: | Q54 Q56 Q58 H23 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:201625&r=reg |
| By: | Alexandros Dimitropoulos; Walid Oueslati |
| Abstract: | The rebound effect is the phenomenon underlying the disproportionality between energy efficiency improvements and observed energy savings. This paper presents a meta-analysis of 76 primary studies and 1138 estimates of the direct rebound effect in road transport to synthesise past work and inform ongoing discussions about the determinants and magnitude of the rebound effect. The magnitude of rebound effect estimates varies with the time horizon considered. On average, the direct rebound effect is around 12% in the short run and 32% in the long run. Indirect and macroeconomic effects would come on top of these estimates. Heterogeneity in rebound effect estimates can mainly be explained by variation in the time horizon considered, the elasticity measure used and the econometric approach employed in primary studies, and by macro-level economic factors, such as real income and gasoline prices. In addition to identifying the factors responsible for the variation in rebound effect estimates, the meta-regression model developed in this paper can serve as a relevant tool to assist policy analysis in contexts where rebound effect estimates are missing. L'effet de rebond est un phénomène qui sous-tend la disproportionnalité entre les améliorations de l'efficacité énergétique et les économies d'énergie observées. Ce papier présente une méta-analyse de 76 études primaires et 1138 estimations de l'effet de rebond direct dans le transport routier pour synthétiser les travaux passés et informer les discussions en cours sur les déterminants et l'ampleur de l'effet de rebond. L'ampleur des estimations de l'effet de rebond varie selon l'horizon temporel considéré. En moyenne, l'effet de rebond est d'environ 12% à court terme et 32% à long terme. Les effets indirects et macroéconomiques viendront s'ajouter à ces estimations. L'hétérogénéité des estimations de l'effet de rebond s'explique principalement par la variation de l'horizon temporel considéré, la mesure d'élasticité utilisée et l'approche économétrique déployée dans les études primaires, ainsi que par des facteurs macroéconomiques tels que le revenu réel et les prix de l'essence. En plus de l'identification des facteurs responsables de la variation des estimations des effets de rebond, la méta-régression, développée dans ce papier, fournit un outil pertinent pour analyser les politiques en vigueurs dans les contextes où les estimations de l'effet rebond sont manquantes. |
| Keywords: | fuel efficiency, gasoline price, meta-analysis, Rebound effect, road transport |
| JEL: | D12 R48 Q48 Q58 R41 Q41 |
| Date: | 2016–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:oec:envaaa:113-en&r=reg |
| By: | Pio Baake; Slobodan Sudaric |
| Abstract: | We analyze pricing and competition under paid prioritization within a model of interconnected internet service providers (ISPs), heterogeneous content providers (CPs) and heterogeneous consumers. We show that prioritization is welfare superior to a regime without prioritization (network neutrality) and yields higher incentives for investment in network capacities. As ISPs price discriminate between on-net and off-net CPs, their bottleneck property is propagated and competition for consumers increases resulting in a potential prisoner's dilemma when deciding whether to offer prioritization. We show that peering for prioritized traffic emerges as a collusive outcome and present off-net prices as a further collusive instrument. |
| Keywords: | interconnection, investment, network neutrality, prioritization |
| JEL: | L13 L51 L96 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1629&r=reg |
| By: | Marten Ovaere; Evelyn Heylen; Stef Proost; Geert Deconinck; Dirk Van Hertem |
| Abstract: | The value of lost load (VOLL) is an essential parameter for transmission system reliability management. It represents the cost of unserved energy of electricity interruptions. Various empirical studies have estimated this parameter for different countries and more recently, for different interruption characteristics - such as interruption duration, time of interruption and interrupted consumer. However, most applications only use one constant VOLL. Our theoretical analysis shows that using more-detailed VOLL data allows to make better-informed transmission reliability decisions. To illustrate this, we estimate the efficiency gains of including consumer and time characteristics in short-term transmission reliability management using VOLL data from Norway, Great Britain and the United States. Depending on the VOLL data and the method of demand curtailment, our five-node network indicates efficiency gains up to 43%. However, increased efficiency leads to decreased equity. Striking the balance between these opposing objectives is crucial for social acceptance. |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:558061&r=reg |
| By: | Coria, Jessica (Department of Economics, School of Business, Economics and Law, Göteborg University); Zhang, Xiao-Bing (School of Economics, Renmin University of China.) |
| Abstract: | Road pricing can improve air quality by reducing and spreading traffic flows. Nevertheless, air quality does not depend only on traffic flows, but also on pollution dispersion. In this paper we investigate the effects of the temporal variation in pollution dispersion on optimal road pricing, and show that time-varying road pricing is needed to make drivers internalize the social costs of both time-varying congestion and time- varying pollution. To this end, we develop an ecological economics model that takes into account the effects of road pricing on integrated daily commuting patterns. We characterize the optimal road pricing when pollution dispersion varies over the day and analyze its effects on traffic flows, arrival times, and the number of commuters by car. |
| Keywords: | Air pollution; Road transportation; Road pricing; Pollution dispersion |
| JEL: | Q53 Q58 R41 R48 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0682&r=reg |
| By: | Lucas W. Davis; Christopher R. Knittel |
| Abstract: | Despite widespread agreement that a carbon tax would be more efficient, many countries use fuel economy standards to reduce transportation-related carbon dioxide emissions. We pair a simple model of the automakers' profit maximization problem with unusually-rich nationally representative data on vehicle registrations to estimate the distributional impact of U.S. fuel economy standards. The key insight from the model is that fuel economy standards impose a constraint on automakers which creates an implicit subsidy for fuel-efficient vehicles and an implicit tax for fuel-inefficient vehicles. Moreover, when these obligations are tradable, permit prices make it possible to quantify the exact magnitude of these implicit subsidies and taxes. We use the model to determine which U.S. vehicles are most subsidized and taxed, and we compare the pattern of ownership of these vehicles between high- and low-income census tracts. Finally, we compare these distributional impacts with existing estimates in the literature on the distributional impact of a carbon tax. |
| JEL: | H22 L5 L91 Q48 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22925&r=reg |
| By: | Pablo Ibáñez Colomo |
| Abstract: | This piece considers the interface between EU competition law and the regulation of network industries. The two have been transformed as a result of their interactions. It is difficult to make sense of contemporary EU competition law without taking into account the consequences that the liberalisation process has had on it. Similarly, regulation sees EU competition law as a model and an aspiration. In this sense, the two disciplines can be said to be mutually compatible. In spite of the compatibility between EU competition law and sector-specific regulation, there is tension between them. The objectives of the two are not identical. Regulation is conceived to undermine the position of the incumbent and to introduce fragmentation. EU competition law, on the other hand, seeks to preserve the competitive constraints to which firms are subject. As a consequence of this tension, the substantive standards in EU competition law may vary to accommodate the features and demands of network industries. Finally, it appears that EU competition law and sector-specific regulation have a complementary relationship. Sectoral regimes often lack the tools to achieve their objectives. The substantive scope of regulation may be limited, or the range of measures insufficient to address all concerns. EU competition law is a versatile instrument that can remedy some of these gaps. It has proved to be an effective tool to preserve fragmentation in liberalised markets and to manage technological change. |
| JEL: | L81 |
| Date: | 2016–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:66573&r=reg |
| By: | Marc Gronwald; Ngo Van Long; Luise Roepke |
| Abstract: | We analyze the effects of two popular second-best clean energy policies, using an extended resource extraction framework. This model features, first, heterogeneous energy sources and, second, a capacity-constrained backstop technology. This setup allows for capturing the following two empirical observations. First, different types of energy sources are used simultaneously despite different production costs. Second, experiences from various European countries show that a further expansion of the use of climate friendly technologies faces substantial technological as well as political constraints. We use this framework to analyze if under two policy scenarios a so-called “Green Paradox” occurs. A subsidy for the clean energy as well as an expansion of the capacity of the clean energy are considered. The analysis shows that while both policy measures lead to a weak Green Paradox, a strong Green Paradox is only found for the capacity expansion scenario. In addition, the subsidy is found to be welfare enhancing while the capacity increase is welfare enhancing only if the cost of adding the capacity is sufficiently small. Nous analysons les effets de deux politiques encourageant l’énergie verte, en utilisant un cadre élargi d’extraction des ressources. Ce modèle comporte, d’une part, des sources d’énergie hétérogènes et, d’autre part, une technologie verte dont l’exploitation est sous une contrainte de capacité. Cette configuration permet de capturer les deux observations empiriques suivantes. Tout d’abord, plusieurs sources d’énergie sont utilisées simultanément malgré l’écart de coûts de production. Deuxièmement, les expériences de divers pays européens montrent qu’une expansion accrue de l’utilisation de technologies respectueuses du climat fait face à des contraintes technologiques et politiques importantes. Nous utilisons ce cadre pour analyser si sous deux scénarios de politique un soi-disant « Paradoxe Vert » se produit. Une subvention sur le coût de l’énergie verte ainsi qu’une expansion de la capacité de l’énergie verte sont prises en considération. L’analyse montre que tandis que les deux mesures politiques conduisent à un Paradoxe Vert faible, un Paradoxe Vert fort est seulement trouvé pour le scénario d’expansion de la capacité. En outre, la subvention améliore le bien-être, alors que l’accroissement de la capacité ne favorise le bien-être que si le coût d’ajout de la capacité est suffisamment faible. |
| Keywords: | Capacity constraints, Green Paradox, Climate change, Simultaneous resource use, Contrainte de capacité, Paradoxe Vert, Changements climatiques, Utilisation simultanée des ressources |
| JEL: | Q38 Q54 H23 |
| Date: | 2016–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2016s-61&r=reg |
| By: | Florian K\"uhnlenz; Pedro H. J. Nardelli |
| Abstract: | We present a simple, yet realistic, agent-based model of an electricity market. The proposed model combines the spot and balancing markets with a resolution of one minute, which enables a more accurate depiction of the physical properties of the power grid. As a test, we compare the results obtained from our simulation to data from Nord Pool. |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1612.04512&r=reg |
| By: | Villas-Boas, Sofia B; Taylor, Rebecca; Krovetz, Hannah |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2016–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:agrebk:qt9vh3x180&r=reg |