The electricity sector accounts for a large share of China’s carbon dioxide emissions and of the economy-wide abatement potential. China’s planned national emissions trading scheme would include electricity generation, as nearly all emissions trading schemes do. The critical difference is that in most existing carbon pricing systems the power sector operates with competitive markets and…
2017
An Option Analysis of the European Union Renewable Energy Support Mechanisms
We examine the economic efficiency of incentive mechanisms used to promote Renewable Energy (RE) across the European Union (EU) by looking at returns to investors along with any negative externalities or social costs. Using electricity price data from 2009 to 2013, we evaluate the RE support mechanisms adopted by some of the largest EU economies….
A regulatory framework for an evolving electricity sector: Highlights of the MIT utility of the future study
The electric power sector is once again evolving. A variety of distributed energy resources and improving computation, communication, and control technologies create an unprecedented degree of choice for electricity consumers, choices that are poorly guided by electricity rates and other incentives designed for a comparatively simpler era. These technologies also create new tools for regulated…
“Prosumage” and the British Electricity Market
Domestic electricity consumers with PV panels have become known as “prosumers”; some of them also have energy storage and we have named the combination “prosumage”. The challenges of renewable intermittency could be offset by storing power, and many engineering studies consider the role and value of storage which is properly integrated into the ‘smart grid’….
Influence of Climate Policy and Market Forces on Coal-fired Power Plants: Evidence on the Dutch market over 2006-2014
Many governments aim to reduce the dependence on coal-fired generation to decrease carbon emissions. At the same time power markets with competition between independently operating power firms have been created which leave the actual decisions concerning electricity production to these firms. This paper analyzes the interaction between climate policies and policies to foster power markets….
Balancing between competition and coordination in smart grids – a Common Information Platform (CIP)
The commercial value added in electricity distribution networks and smart grids is increasing. Concerns about competition on a level-playing field are raised. The debate on vertical network unbundling is reaching the distribution networks. Primary driver for this discussion is the requirement to exchange information in smart grids in a neutral and non-discriminatory way. Against the…
Performance Incentives in Capacity Mechanisms: Conceptual Considerations and Empirical Evidence
Performance incentives are elements of capacity mechanism design aimed at prompting committed agents to manage their resources in such a way that they eventually meet their obligations when the system is tight. These incentives can be introduced in practice by means of two different (but non-conflicting) approaches in capacity mechanisms. First, performance incentives can be…
Climate Policy with the Chequebook – An Economic Analysis of Climate Investment Support
Across the globe, climate policy is increasingly using investment support instruments, such as grants, concessional loans, and guarantees – whereas carbon prices are losing importance. This development substantially increases the risk of inefficient public spending. In this paper, we examine the ability of finance instruments to effectively and efficiently address market failures related to clean…