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on Regulation |
| By: | Glensk, Barbara (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)) |
| Abstract: | This paper aims to analyze what happens with renewable energy power plants, such as onshore wind, photovoltaics and biomass, when the public policy support based on the Renewable Energy Law expires. With its expiration the first renewable energy (and especially onshore wind) power plants will have to be scrutinized whether they can economically continue operation, whether they have to be repowered, or whether they need to be decommissioned. The relative merits of these three alternatives are evaluated by applying real options analysis. In contrast to traditional project evaluation techniques, the real options approach takes advantage of the use of uncertain parameters included in the model, such as the development of the electricity price or electricity output. The results obtained suggest that parameters such as the level of future operation and maintenance costs, the expected development of the electricity price at the spot market, and the interrelations between these, as well as the development of the electricity output from renewables can significantly affect the profitability of these power plants and thus impact the decision about their further optimal operation. |
| Keywords: | Renewable energy; Real options; Energy market; Policy support; Repowering |
| JEL: | Q01 Q21 Q40 Q41 Q48 |
| Date: | 2019–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:fcnwpa:2019_005&r=all |
| By: | Donatella, Baiardi |
| Abstract: | Yes, they matter. To reply to this question, we assess the impact of energy efficiency and renewable energy policies on six different air pollutants: carbon dioxide (CO2), methane (CH4), nitrous oxides (N2O), non-methane volatile organic compounds (NMVOCs), nitrogenoxides (NOx) and sulphur dioxide (SO2) in the case of the Italian provinces in the decade 2005-2015. The empirical analysis is performed in a panel data context by means of propensity score matching with multiple treatment, since our framework is characterized by the presence of two treatments, corresponding to the two different energy policies analyzed, i.e. energy efficiency policy and renewable policy. These two policies can be applied by each province as mutually exclusive strategies or as joint strategies. Our results show that renewable policies are the most effective in terms of climate goals especially when implemented on a local scale, while energy efficiency policies alone are in effective. Moreover, the success of these policies depends on the type of pollutant to be reduced. Finally, we note that the effect of these two policies was reinforced by the counter-cyclical fiscal policies implemented to contrast the Global Financial Crisis in 2008. |
| Keywords: | Energy efficiency policies; Renewable energy policies; Global air pollutants; Local air pollutants; Propensity score matching with multiple treatment; Italian provinces. |
| JEL: | Q50 Q40 Q53 Q58 Q48 Q20 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:425&r=all |
| By: | Fraunholz, Christoph; Keles, Dogan; Fichtner, Wolf |
| Abstract: | In electricity markets around the world, the substantial increase of intermittent renewable electricity generation has intensified concerns about generation adequacy, ultimately driving the implementation of capacity remuneration mechanisms. Although formally technology-neutral, substantial barriers often exist in these mechanisms for non-conventional capacity such as electricity storage. In this article, we provide a rigorous theoretical discussion on design parameters and show that the concrete design of a capacity remuneration mechanism always creates a bias towards one technology or the other. In particular, we can identify the bundling of capacity auctions with call options and the definition of the storage capacity credit as essential drivers affecting the future technology mix as well as generation adequacy. In order to illustrate and confirm our theoretical findings, we apply an agent-based electricity market model and run a number of simulations. Our results show that electricity storage has a capacity value and should therefore be allowed to participate in any capacity remuneration mechanism. Moreover, we find the implementation of a capacity remuneration mechanism with call options and a strike price to increase the competitiveness of storages against conventional power plants. However, determining the amount of firm capacity an electricity storage unit can provide remains a challenging task. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kitiip:37&r=all |
| By: | David Ennnen (Institute of Transport Economics, Muenster) |
| Abstract: | In the policy debate on ride-hailing services such as Uber, the impacts on traffic, emissions, and public transport are hotly discussed. The regulatory framework in Germany has so far prevented a widespread entry of ride-hailing providers. In this paper, we use a mode choice model and trip data to determine the likely impacts of ride-hailing services for a representative region in Germany. We find that the significantly lower fares compared to taxis lead to strong substitution of public transport, cycling, and walking. As a consequence, motorized traffic increases, despite the pooling of individual rides by ride-hailing providers. However, the total impact on mode choice and traffic remains modest, and a widespread displacement of public transport is not to be expected. The final welfare analysis shows that the emergence of ride-hailing services is beneficial for society as a whole. In particular, the benefits from lower fares exceed the external costs arising from additional motorized traffic. |
| Keywords: | Ride-hailing, Transportation Network Company, TNC, Taxi, Regulation, Germany |
| JEL: | L92 L98 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:mut:wpaper:29&r=all |
| By: | BOCCARD Nicolas, (Universitat de Girona); GAUTIER Axel, (Université de Liège, CORE and CESifo) |
| Abstract: | Many jurisdictions use net metering to record the power exchange between solar photovoltaic panels and the grid, thus valuing home production at the electricity retail rate. However, if over the billing period, production exceeds consumption, the surplus remains freely available for consumption. In Wallonia (Belgium), this system was combined with generous subsidies for solar panels that encouraged households to set-up large installations, possibly exceeding their consumption needs. In this context, we test for a possible rebound effect. Based on a large sample of residential PV installations, we observe that a large proportion of households oversized their installation to benefit from the subsidies and, later ended-up consuming most of their excess production. The effect is econometrically highly significant. There are thus evidence of a strong increase in energy consumption by residential PV owners, that runs counter the original policy design. |
| Keywords: | rebound effect, solar PV, net metering |
| JEL: | C51 Q48 Q58 Q41 Q42 |
| Date: | 2020–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2020002&r=all |
| By: | Brown, David P. (University of Alberta, Department of Economics); Zarnikau, Jay (University of Texas at Austin); Woo, Chi-Keung (Education University of Hong Kong) |
| Abstract: | Using data from Texas’s wholesale electricity market, we investigate if there is a relationship between nodal prices and investment location decisions of utility scale generation. We find some evidence that new investment arises in areas with recently elevated nodal prices. However, we find no evidence that new generation resources receive a nodal price premium post-entry as projected by the expectation of higher nodal prices. Further, we employ a regression analysis to test the relationship between expected nodal prices and the probability of entry at a given node. While this analysis finds a positive relationship between expected nodal prices and investment for natural-gas-fueled peaking assets, this relationship is sensitive to model specification. Our findings suggest that factors other than nodal prices are more likely drivers of utility scale generation capacity investment location decisions in Texas. |
| Keywords: | Electricity; Regulation; Entry; Locational Marginal Pricing |
| JEL: | L11 L51 L94 Q41 Q48 |
| Date: | 2020–01–17 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2020_001&r=all |
| By: | Riccardo Camboni (DSEA, University of Padova); Paola Valbonesi (DSEA, University of Padova and HSE-NRU, Moscow) |
| Abstract: | We empirically investigate incumbents' and entrants' bids on an original dataset of 192 scoring rule auctions for canteen services in Italy. Our findings show that winning rebates are lower (i.e., prices paid by the public buyer are higher) when the contract is awarded to the incumbent supplier. This result is not explained by the observable characteristics of the auction and service awarded. We then develop a simple theoretical model that shows that such a result is consistent with a setting in which the buyer distorts the scoring function to increase the probability that the incumbent wins the auction at the cost of a higher purchasing price. |
| Keywords: | Scoring Rule Auctions, Procurement, Incumbent and Entrant, Auction design |
| JEL: | D44 D47 H57 L88 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0242&r=all |
| By: | Florian Perrotton (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Olivier Massol (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, IFP School, University of London [London]) |
| Abstract: | In poor developing countries, the discovery of large gas deposits often stimulates the public authorities' appetite for ambitious development strategies requiring the construction of a large national pipeline system. However, the foreign private investors financing its installation usually prefer smaller infrastructure designs that are solely intended to supply a few creditworthy industrial sites. Focusing on the situation in Mozambique, we examine whether the adoption of rate-of-return (RoR) regulation can reconcile these conflicting objectives. As a first step, we assess the magnitude of the overcapitalization generated ex ante at the planning stage by the application of RoR regulation (i.e., the Averch-Johnson effect) to the investors. Then, analyzing the ex post situation when the enlarged domestic demand materializes, we prove that the allowable rate of return can be set by the regulator to obtain ex ante the degree of overcapitalization needed ex post to serve the enlarged demand in a cost-efficient manner. We finally discuss whether RoR regulation can still protect society from monopoly prices when it is tuned to prompt an optimal degree of building ahead of proven demand. |
| Keywords: | Overcapitalization,Natural gas,Pipeline,Regulatory economics,Developing countries,Mozambique,Building- ahead of demand |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02418234&r=all |
| By: | Iacopo Savelli; Thomas Morstyn |
| Abstract: | Some consumers, such as householders, are unwilling to face volatile electricity prices, and perceive as unfair price differentiations based on location. For these reasons, nodal prices in distribution networks are rarely employed. However, the increasing availability of renewable resources in distribution grids, and emerging price-elastic behaviour, pave the way for the effective introduction of marginal nodal pricing schemes in distribution networks. The aim of the proposed framework is to show how traditional non-flexible consumers can coexist with flexible users in a local distribution area, where the latter pay nodal prices whereas the former are charged a fixed price, which is derived by the underlying nodal prices. In addition, it determines how the distribution system operator should manage the local grid by optimally determining the lines to be expanded, and the collected network tariff levied on network users, while accounting for both congestion rent and investment costs. The proposed framework is formulated as a non-linear integer bilevel model, which is then recast as an equivalent single optimization problem, by using integer algebra and complementarity relations. The power flows in the distribution area are modelled by resorting to a second-order cone relaxation, whose solution is exact for radial networks under mild assumptions. The final model results in a mixed-integer quadratically constrained program, which can be solved with off-the-shelf solvers. Numerical test cases based on a 5-bus and a 33-bus networks are reported to show the effectiveness of the proposed method. |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2001.04283&r=all |
| By: | Barrows, Geoffrey (Ecole Polytechnique, Paris); Garg, Teevrat (University of California, San Diego); Jha, Akshaya (Carnegie Mellon University) |
| Abstract: | This paper estimates the effect of coal-fired power plants on infant mortality in India. We find that a one GW increase in coal-fired capacity corresponds to a 14% increase in infant mortality rates in districts near versus far from the plant site. This effect is 2-3 times larger than estimates from the developed world. Our effects are larger for: (1) older plants, (2) plants located in areas with higher baseline levels of pollution, and (3) plants burning domestic rather than imported coal. The environmental benefits from policy aimed at the power sector are thus likely to be substantially higher if targeted at older plants located in more polluted areas tailored to burn domestic rather than imported coal. |
| Keywords: | coal, electricity, India, air pollution, infant mortality, infrastructure |
| JEL: | I15 Q51 Q56 Q48 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12838&r=all |
| By: | Masaki Aoyagi; Seung Han Yoo |
| Abstract: | A platform matches agents from two sides of a market to create a trading opportunity between them. The agents subscribe to the platform by paying subscription fees which are contingent on their reported private types, and then engage in strategic interactions with their matched partner(s). A matching mechanism of the platform specifies the subscription fees as well as the matching rule which determines the probability that each type of agent on one side is matched with each type on the other side. We characterize optimal matching mechanisms which induce truthful reporting from the agents and maximize the subscription revenue. We show that the optimal mechanisms for a one-to-one trading platform match do not necessarily entail assortative matching, and may employ an alternative matching rule that maximizes the extraction of informational rents of the higher type. We then study an auction platform that matches each seller to two agents, and show that the optimal mechanism entails the combination of negative and positive assortative matching. |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1072&r=all |
| By: | Pierre BAUBY (Institut d’Etudes Politiques (Sciences Po) Paris, Researcher and Professor of Political Science. Chairman of Reconstruire l’action publique (RAP), Director of Observatoire de l’action publique of Fondation Jean-Jaurès (France)) |
| Abstract: | This paper aims to treat specific issues about the governance of SOEs operating under monopoly situations, in particular the link between regulation, evaluation, control and modernisation of such enterprises. The survey of the literature reveals a lot of studies on some of these topics, but very few on the link between them and such SOEs’. The paper addresses in particular the asymmetries of information and expertise between public authorities and SOEs; the strategic role of the State in the EU context, rights and duties of public authorities; how to minimize asymmetries of information between monopoly situations and public authorities; what type of regulatory bodies can be set up; how to implement evaluation both of “regulation†and of the economic and social efficiency of each SOE; why and how to involve stakeholders’ participation. |
| Keywords: | Monopoly situations; Asymmetries; Strategic State; Regulation; Evaluation; Participation |
| JEL: | K2 L12 L43 L50 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:crc:wpaper:1931&r=all |
| By: | Tamara Sheldon; Rubal Dua (King Abdullah Petroleum Studies and Research Center) |
| Abstract: | Subsidies for promoting plug-in electric vehicle (PEV) adoption are a key component of China’s overall plan for reducing local air pollution and greenhouse gas (GHG) emissions from its light-duty vehicle sector. This paper explores the impact and cost-effectiveness of the Chinese PEV subsidy program. A vehicle choice model is estimated using a large random sample of individual-level data for new vehicle purchases in China for model year 2017. |
| Keywords: | China Electric Car Market, China New Energy Vehicle Policy, Subsidies for Electric Vehicle |
| Date: | 2019–12–29 |
| URL: | http://d.repec.org/n?u=RePEc:prc:dpaper:ks--2019-dp77&r=all |
| By: | Dertwinkel-Kalt, Markus; Wey, Christian |
| Abstract: | We re-consider the bilateral bargaining problem of a multi-product, manufacturer-retailer trading relationship. O'Brien and Shaffer (Rand JE 35:573-598, 2005) have shown that the unbundling of contracts leads to downward distorted production levels if seller power is strong, while otherwise the joint profit maximizing quantities are contracted (which is also always the case when bundling contracts are feasible). We show that the unbundling of contracts also leads to downward distorted output levels when the buyer firm has sufficient (Nash) bargaining power (i.e., buyer power). Our result is driven by cost substitutability (diseconomies of scope). |
| Keywords: | Vertical Restraints,Bundling,Buyer Power |
| JEL: | L13 L41 K21 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:329&r=all |
| By: | Pittman, Russell; Jandova, Monika; Krol, Marcin; Nekrasenko, Larysa; Paleta, Tomas |
| Abstract: | The European Commission years ago adopted a policy of encouraging the substitution of motor carrier haulage of freight with rail and water carrier haulage, as part of its “green” agenda of reducing fuel consumption, emission of pollutants, carbon intensity, and road congestion. Regarding railway freight in particular, one policy tool that the Commission has emphasized for this purpose is the restructuring of the rail sectors of member countries through the creation of competition for the incumbents by new train-operating companies (TOC’s) – on its face a less obvious policy choice than alternatives such as Pigouvian pricing measures or infrastructure subsidies. This paper focuses on one important commodity group – grain – in three EC member states and one non-member state – Poland, the Czech Republic, Slovakia, and Ukraine – to examine the degree to which increased rail competition has been associated with increases in rail’s modal share, and more broadly to learn what appear to be the binding constraints to increases in rail’s share. Such constraints seem more closely related to shortages in infrastructure capacity than to a lack of competition among TOC’s. This suggests that other “models” of railway restructuring may be more effective in easing this constraint. |
| Keywords: | European Commission, railways competition, environmental protection, open access, motor carriers, intermodal competition |
| JEL: | L92 Q58 R11 R41 R42 R48 |
| Date: | 2019–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:97571&r=all |
| By: | Ait Ali, Abderrahman (Swedish National Road & Transport Research Institute (VTI)); Eliasson, Jonas (Swedish National Road & Transport Research Institute (VTI)); Warg, Jennifer (Swedish National Road & Transport Research Institute (VTI)) |
| Abstract: | Many models have been developed and used to analyse the costs and benefits of transport investments. Similar tools can also be used for transport operation planning and capacity allocation. An example of such use is the assessment of commuter train operations and service frequency. In this study, we analyse the societally optimal frequency for commuter train services. The aim is to reveal the implicit valuation (by the public transport agency) of the waiting time and the in-vehicle crowding in the commuting system. We use an analytic CBA model to formulate the societal costs of a certain service frequency and analyse the societally optimal frequencies during peak and off-peak hours. Comparing the optimal and the actual frequencies allows to reveal the implicit valuations of waiting time and crowding. Using relevant data from the commuter train services in Stockholm on a typical working day in September 2015 (e.g., OD matrix, cost parameters), we perform a numerical analysis on certain lines and directions. We find the societally optimal frequency and the implicit valuation of waiting time and crowding. The results suggest that the public transport agency in Stockholm (i.e., SL) adopted service frequencies that are generally slightly higher than societally optimum which can be explained by a higher implicit valuation of waiting time and crowding. We also find that the optimal frequencies are more sensitive to the waiting time valuation rather than that of crowding. |
| Keywords: | Waiting time; Crowding; Cost benefit analysis; Implicit preference; Commuter train |
| JEL: | L92 R40 R41 R42 R48 |
| Date: | 2020–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:vtiwps:2020_001&r=all |
| By: | Mause, Karsten |
| Abstract: | In many cases, the expected efficiency advantages of public-private partnership (PPP) projects as a specific form of infrastructure provision did not materialize ex post. From a Public Choice perspective, one simple explanation for many of the problems surrounding the governance of PPPs is that the public decision-makers being involved in the process of initiating and implementing PPP projects (namely, politicians and public bureaucrats) in many situations make low-cost decisions in the sense of Kirchgässner. That is, their decisions may have a high impact on the wealth of the jurisdiction in which the PPP is located (most notably, on the welfare of citizen-taxpayers in this jurisdiction) but, at the same time, these decisions often only have a low impact on the private welfare of the individual decision-makers in politics and bureaucracies. The latter, for example, in many settings often have a low economic incentive to monitor/control what the private sector partners are doing (or not doing) within a PPP arrangement. The purpose of this paper is to draw greater attention to the problems created by low-cost decisions for the governance of PPPs. Moreover, the paper discusses potential remedies arising from the viewpoint of Public Choice and constitutional political economy. |
| Keywords: | Public-Private Partnerships, PPPs, Efficiency, Public Choice, Government Failure, Governance. |
| JEL: | D72 D73 H10 H54 H57 H82 K00 L32 L33 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:97686&r=all |
| By: | Ariane Charpin; Joanna Piechuka |
| Abstract: | Many industries are seeing an increase in concentration, leading to a discussion on the effectiveness of horizontal merger enforcement. The policy debate shows that one of the key arguments put forward when supporting potential mergers is the possibility of realization of merger efficiency gains, specifically in the transport industry. Yet, there exists little empirical evidence on the actual effects of realized mergers on cost efficiencies. We exploit a large and highly debated merger that took place in the French transport industry to evaluate whether a merger between two major transport groups may give rise to merger efficiency gains. We exploit the industry setting to employ a difference-in-differences methodology evaluating the effect of the merger on operating costs of merging transport groups. Our results show that the merger did not lead to any merger specific efficiency gains for the merging parties. Our study relies on the use of several control groups and is robust to a great number of robustness checks as well as to the introduction of heterogeneous treatment effects, depending on the identity of the merging party, the contract type in place, as well as the closeness of competition of local operators. Overall, our study contributes to a growing number of case studies undertaken by economists that can help determine whether horizontal merger policy is being properly enforced. |
| Keywords: | Ex-post Evaluation; Mergers; Transport industry; Merger cost efficiencies |
| JEL: | C31 L40 L50 L92 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1843&r=all |