Energy subsidies are pervasive. Pretax subsidies, which arise when energy consumers pay less than the supply cost of energy, are high in many developing and emerging economies. Although pretax subsidies are not prevalent in advanced economies, they have large tax subsidies. These arise when energy is taxed below the rate of other consumption goods and…
Month: February 2026
Demand Side Response: Patterns in Europe and Future Policy Perspectives under Capacity Mechanisms
Demand Side Response (DSR) has been slow to emerge in European electricity markets. This paper aims to both examine the reasons for low levels of DSR in Europe and reflect on factors that might affect the participation of DSR in capacity mechanisms. It relies on available evidence from the literature, secondary data on existing DSR…
Do Consumers Want Smart Meters? Incentives or Inertia: Evidence from North Carolina and Lessons for Policy
In an effort to improve efficiency of electrical markets the U.S. government hopes to encourage changing household use patterns, such as dishwasher and clothes dryer use, to off-peak times. One strategy has been to subsidize the installation of smart meters. In addition the government has encouraged electrical energy conservation by providing incentives for energy saving…
Germany’s Nuclear Phase-out: Sensitivities and Impacts on Electricity Prices and CO2 Emissions
Following the nuclear meltdown in Fukushima Daiichi, in summer 2011 the German parliament decided to phase-out nuclear power by 2022. When this decision was taken, a number of model-based analyses investigated the influence this decision would have on electricity prices and CO2 emissions. They concluded that CO2 emissions would be kept at levels that are…
Book Reviews
Technological Advance in Cooling Systems at U.S. Power Plants
Prior to adoption of the 1972 Clean Water Act (CWA) most U.S. power plants used once-through cooling water systems that discharged large quantities of warm water. This resulted in significant amounts of thermal pollution in neighboring bodies of water. The CWA essentially mandated recirculating systems for new facilities. This paper investigates whether there was technological…
EU ETS Phase 3 Benchmarks – Implications and Potential Flaws
In Phase 3 (2013-20) of the European Union Emissions Trading Scheme, the allocation methodology has shifted from grandfathering to a combination of auctioning and benchmark-based free allocation in the framework of Community-wide rules. Free allocation will apply mainly to non-electricity generators, and will decrease linearly throughout the phase with a view of ending free allocation…
European Electricity Market Reforms: The “Visible Hand” of Public Coordination
The paper investigates how proposed reforms on policies to maintain generation adequacy and to encourage clean technology investments in a number of European countries, modify the role of the market. This is reduced as the government, regulator and system operator take on explicit responsibility through the introduction of capacity mechanisms and long-term support for clean…
Transparency in Electricity Markets
The European Commission is introducing new regulations on submission and publication of data in electricity markets (SPDEM) and on wholesale energy market integrity and transparency (REMIT). I discuss issues relevant for undertaking an evaluation of such regulations. I argue that, for market performance, more information is not always better; indeed, more information may undermine market…
Electricity Scarcity Pricing Through Operating Reserves
Suppressed prices in real-time markets provide inadequate incentives for both generation investment and active participation by demand bidding. An operating reserve demand curve developed from first principles would improve reliability, support adequate scarcity pricing, and be straightforward to implement within the framework of economic dispatch. This approach would be fully compatible with other market-oriented policies….