Incentives for cost reduction and cost padding in electricity markets with overlapping “green” regulations

We examine overlapping regulations in electricity markets. Using an example based on a stylized model of a competitive energy market, we study cost-reduction and cost-padding incentives by “green-energy” producers in an electricity market employing an emissions tax and the simultaneous use of a green quota for the generation portfolio and a fair rate-of-return constraint implemented via a system of feed-in tariffs. We show inter alia that when subsidies are phased out, exploitation of the green technologies full cost-reduction potential is a Nash Equilibrium but emissions will increase. In addition, green-energy producers can engage in collusive cost padding to increase profits even as they satisfy the policymaker's desired green quota.     

Geothermal energy in Australia

Although Australia is not usually associated with geothermal energy, it possesses significant amounts of both conventional (wet) geothermal and hot dry rock (HDR) geothermal resources. The country's conventional geothermal resources are extensive, but are low temperature and are located in areas of low population density with the result that they are not used extensively for either electricity generation or for direct heating. Australia's HDR resources, on the other hand, represent a world-class resource but have not been used to date because the technology for converting HDR resources into electricity is not yet fully commercial. The effort being directed towards exploring economically useful HDR resources and in the development of technology to convert this energy resource into electricity could make HDR resources an important part of Australia's energy mix in the near future, but there are major barriers.     

Wholesale electricity market economics of solar generation in Israel

We use a two-stage model to determine the equilibrium capacities, generation levels, and prices of a wholesale electricity market in which independent power producers (IPPs) use natural gas-fired (NG) and photovoltaic (PV) technologies. PV's effective capacity is high during midday but low in other daytime hours. Applied to Israel's stylized electricity market in 2030, our model finds NG and PV are necessary to meet Israel's electricity demands; NG mitigates daytime price spikes and enhances consumer welfare; NG IPPs are profitable; and PV IPPs may be unprofitable, potentially requiring government support to aid Israel's achievement of a clean and sustainable future.     

Consumer preferences and electricity pricing reform in Western Australia

Australia's electricity prices are high, driven by rising peak demand that is forcing significant levels of infrastructure investment. Compounding these factors is the lack of transparent price signals for consumers, with uniform pricing structures providing no incentive to change consumption behaviours.This research surveyed residential electricity consumers in Western Australia about their perceptions of solar, consumption behaviour, and electricity pricing structures.The results suggest that customers in Western Australia may be willing to change behaviour, reduce electricity usage, and be rewarded for use of renewable technologies, highlighting an opportunity for policies such as retail tariff reform to be further explored.     

Coordination between clean energy generation and thermal power generation under the policy of “direct power-purchase for large users” in China

The inefficient utilization of clean energy and distorted pricing mechanism are the most critical problems that have hampered the reform of China's electric power industry for many years. A large number of clean energy generators have recently been constructed, but water spillage at hydroelectric facilities and wind curtailment persist due to integration challenges. The adjustment of electricity price has relied on executive orders of the Chinese government and the National Development and Reform Commission (NDRC). Distorted prices that are not derived from a market economy have seriously hampered the development of China's electricity market. Therefore, in recent years, the Chinese government has issued a number of reform measures concerning “direct power-purchase for large users”. The main idea of this pricing mechanism is to form direct negotiations between large users and generators to determine the electricity price. To a certain extent, this pricing mechanism is conducive to the electricity market reform in China. However, the coordination between clean energy generation and thermal power generation under the policy of “direct power-purchase for large users” has become the key issue in China's electric power industry. This paper summarizes the policies of “direct power-purchase for large users” in different provinces in China. The electricity market in Yunnan, for which the contradiction between thermal power generation and hydropower generation is increasingly severe, is the focus of the research. At last, a feasible electricity market scheme has been derived to coordinate thermal power generation and hydropower generation. This scheme has considerable theoretical and practical significance to the future of China's electricity market reform.     

The impact of transparency policies on local flexibility markets in electric distribution networks

The energy transition brings various technical, economic, and organizational challenges. One major topic, especially in zonal electricity markets, is the organization of future congestion management. Local flexibility market (LFM) is an often discussed concept of market-based congestion management. Like the whole energy system, the market transparency of LFMs can influence individual bidders' behavior. In this context, the predictability of the network status of distribution networks and an LFM's outcome, depending on a given transparency policy, is investigated in this paper. For this, forecast models based on artificial neural networks (ANN) are implemented on synthetic distribution network and LFM data. Three defined transparency policies determine the amount of input data used for the models. The results suggest that the transparency policy can influence the distribution network status and LFM outcome predictability, but appropriate forecasts are generally feasible. Therefore, the transparency policy should not conceal information but provide a level playing field for all parties involved. Providing semi-disaggregated data on the network area level can be suitable for bidders' decision-making and reduces transaction costs.     

Hydro,tidal and wave energy in Australia

The three renewable energy technologies discussed in this paper are based on water, but differ markedly in terms of the size of the available potential resource, the maturity of the associated conversion technologies, the extent to which they have been exploited to date, and the current research effort being devoted to their future development. Hydro-electricity and tidal power are both very mature technologies. The exploitation of Australia's relatively limited potential for hydro-electric development began over a century ago and the opportunities for further hydro-electric development are now very restricted. The country's significant tidal power resources, on the other hand, have not been exploited for electricity generation to date, but continual assessment of the feasibility of tidal power projects has been undertaken over the past half century. Although Australia has large ocean wave energy resources, ocean wave energy conversion technology is not yet fully commercial and no commercial wave generation plants are operating in Australia. A small number of wave energy conversion devices, however, are at the pilot testing stage.     

The limited role for Carbon Capture and Storage (CCS) technologies in a sustainable Australian energy future

There is considerable debate regarding the potential role of Carbon Capture and Storage (CCS) technologies in reducing Australia's greenhouse emissions. The latest climate change science suggests that major (60% or more by 2050), rapid (peaking within 20 years) cuts in global emissions may be required to avoid dangerous climate change. There are a number of existing abatement options including energy efficiency, various renewable energy technologies, nuclear power and fuel switching to natural gas; as well as emerging options including CCS. We outline a simple technology assessment framework for policymakers to evaluate these different options given the climate change imperative. This framework includes technology status, delivered energy services, present and possible future costs, potential scale of abatement, potential speed of deployment and other possible social outcomes. Application of this framework to CCS suggests that it should be considered as a promising, but still somewhat unproven, option that potentially offers very significant abatement potential and good integration into the existing energy industry. There are, however, some outstanding questions regarding its effectiveness and safety, its abatement is likely to come at significant cost, and it is unlikely to be able to make a significant contribution for well over a decade. The Australian policy implications are that while government support for R&D and Demonstration of CCS is appropriate and should in our view be expanded, the major priority should be to support greater deployment of existing abatement options including energy efficiency, efficient gas-fired generation and cogeneration and renewable energy. Such policy support is noticeably lacking at present.     

Infrastructure for new Australian housing: Who pays and how?

As Australia's population rapidly increases, Australian metropolitan strategic plans seek to ensure a balanced approach to the development of new residential areas with infrastructure facilities provided as housing construction progresses. Critical questions relate to the setting of infrastructure standards, the apportioning of costs for new infrastructure and responsibility for its provision and upkeep. The historic shift away from infrastructure funding based on general taxation to a user pays approach, raises questions about social and intergenerational equity. We explore current debates in respect of cost, value and responsibility regarding infrastructure provision in residential development. A case study of a proposed development in South Australia is used to illustrate some of these issues. Finally, new provisions introduced under South Australia's planning reform agenda are examined in light of this evidence.     

Does the Ukrainian electricity market correspond to the european model?

The paper explores 29 models of the European electricity markets and the degree of their deviation from the single electricity market model established by the trans-European legislation. Although all models correspond to the design of the pan-European single one, they remain significantly differentiated according to trading forms and pricing methods. The electric power system in Ukraine has developed oppositely to the European ones, and the electricity market is quasi-competitive. The study proposes a novel model for the Ukrainian electricity market, which considers the European acquis communautaires, the advanced practice in electricity market development, and the specifics of the Ukrainian electric power system.     

Interconnecting an isolated electricity system to the European market: The case of Malta

The long-term European Union (EU) energy policy increasingly requires member countries to reform existing power systems, including those of small island states. These are commonly isolated electricity systems that rely heavily on imported fossil fuels. Interconnections with mainland power systems are an alternative to offset the exposure to volatile fuel prices. This paper studies the 200-MW (MW) subsea transmission cable between the EU island member state of Malta and Sicily that was inaugurated on April 2015. Our main purpose is to examine whether and to what extent Malta's vulnerability to distinct oil price scenarios can be overcome with this new interconnector. We describe the process used to simulate the merit order for both Malta's isolated and interconnected electric generation setup. The algorithm used provides the average electricity spot price and economic scarcity rent of electricity imports and exports. The main finding is that the Malta-Sicily interconnector does not necessarily lower electricity prices for Malta's consumers. However, some scenarios, notably the incorporation of natural gas in Malta's future generation portfolio, achieve win–win situations for both consumer and supplier. The Malta case study shows that cable impacts depend on the installed generation capacity, oil price, and market design.     

Devolution and State Planning Systems in Australia

This paper explores Australia's multi-level system of governance and considers its implications for urban and regional policy. The paper addresses four main questions about Australian urban governance. In what ways can Australia's federal system of urban governance be contrasted with models in other developed countries? How have shifts in recent decades within Australia's federal system affected urban governance? What have been the main characteristics of change within Australia's state/territory planning systems in recent decades, and to what extent have these affected multi-level governance of space? Finally, what lessons about the strengths and weaknesses of a federal system of urban governance can be drawn from the Australian experience?     

Australia,uranium and nuclear power

The nuclear debate in Australia is shaped by the nation's substantial base of energy resources, including its large reserves of uranium and recent rises in the market price of uranium. But the debate also echoes Australia's past in the development of programs for nuclear weapons. The proposals include uranium enrichment, the storage of nuclear waste in Australia, and the introduction of nuclear reactors. A national inquiry has been instituted by the government. These developments, stemming from a range of factors, have revived the opposition to uranium mining and nuclear power which has for two decades held a dominant role in Australian politics. The issue of what should be Australia's energy path in a time of climate change is beginning to be examined. The importance of the decisions, whether to be a player in the nuclear club with its attendant multiple hazards, or to play a quite different leadership role in the development and adoption of sustainable energy strategies and technologies, cannot be exaggerated.     

Long-term contracting in hydro-thermal electricity generation: Welfare and environmental impact

We consider electricity generation industries where thermal operators imperfectly compete with hydro operators that manage a (scarce) water stock stored in reservoirs over a natural cycle. We explore how the exercise of intertemporal market power affects social welfare and environmental quality. We show that, as compared to the outcome of spot markets, long-term contracting either exacerbates or alleviates price distortions, depending upon the consumption pattern over the water cycle. Moreover, it induces a second-order environmental effect that, in the presence of a thermal competitive fringe, is critically related to the thermal market shares in the different periods of the cycle. We conclude by providing policy insights.     

Is the renewable portfolio standard an effective energy policy?: Early evidence from South Korea

This study provides preliminary evaluation of South Korea's Renewable Energy Portfolio Standard (RPS) apropos capacity growth, technological innovation, cost impact, and market risk, compared to Feed-in Tariffs (FITs). Findings indicate that both effectively expand electricity generation from renewable energy sources (RES-Es). Early evidence suggests that the RPS appears to have further strengthened RES-Es' market growth, particularly biomass and solar PV. For most technologies, policy costs appear higher under the RPS than FITs, except for PV and fuel cells. Under the RPS, higher market risks are a major concern, particularly for smaller suppliers in the PV market, despite growing PV capacity.     

A smarter electricity grid for the Eastern Province of Saudi Arabia: Perceptions and policy implications

Saudi Arabia aspires to transition toward a smarter electricity grid with increased reliance on renewable energy, where customers will use or produce green energy and where smart meters will enable customers to tailor their behavior and decrease their carbon footprint. The success of the transition is dependent on householder acceptance. This research studies the public's disposition toward a smarter grid. The Eastern Province of Saudi Arabia is taken as a case study through a field questionnaire to assess public knowledge about energy sources and environmental impacts on the environments, people's disposition toward a smarter electric grid, and the main motivations for undergoing this transition. A logit model is used to investigate determinants. Stated willingness is taken as a variable representing an individual's disposition. We found that the public is willing to use green energy, accept smart meters, or become co-producers. However, their fear of unknown technologies and perceptions about their high cost are major obstacles to their adoption. Enhancive knowledge, especially about ecological sensitivity, and governmental incentives will help to win public acceptance. Also, government subsidies that lower prices should be cut and dynamic pricing should be implemented to motivate electricity saving behavior.     

Impact of Mexico's energy reform on consumer welfare

We study the impact of Mexico's energy reform on the welfare of electricity, liquified petroleum gas, and gasoline consumers between 2010 and 2018. We utilize micro-level data to estimate income and price elasticities. Comparative statics are used to determine subsidy and price influences on consumer surplus. A counterfactual is used to simulate the industry's behavior under non-reform parameters. Data cover ten income deciles and sociodemographic characteristics in the National Survey of Household Income and Expenditure. We conclude that consumers of energy goods in the post-reform experimental group (2014–2018) experienced a welfare gain compared to consumers in the control group (2010–2014) at the expense of alternative social costs related to energy subsidies.     

Pricing in centrally committed electricity markets

A long-standing issue with centrally committed electricity markets is the design of non-confiscatory and equilibrium-supporting prices. This is because the social planner's problem in such a market is a non-convex unit commitment. O'Neill et al. (2005) propose a pricing scheme that overcomes these issues for any market that can be formulated as a mixed-integer linear program. Moreover, claims appear in the literature implying that such a payment mechanism is currently in use in a number of organized electricity markets. Using an illustrative example, we demonstrate that this is not the case. We further demonstrate that the pricing scheme proposed by O'Neill et al. (2005) has some important implications for long-run capacity investment.     

Regulatory and market disharmony in the Turkish electricity industry

We examine the regulatory and market disharmony in the Turkish electricity industry revealed in the course of introducing competition in retail supply. We specifically show that the design of the support mechanism for renewable energy resources and the level of regulated retail tariffs have left little room for the viability of retail competition in the electricity sector. While the cost of the support mechanism has increased the cost for retail suppliers, the regulated tariffs prevent them from reflecting this cost increase in their prices and from providing commercial offers. This induces customers to switch back to their default regulated tariffs.     

Energy policy scenarios to reach challenging climate protection targets in the German electricity sector until 2050

In this article we demonstrate how challenging greenhouse gas reduction targets of up to 95% until 2050 can be achieved in the German electricity sector. In the analysis, we focus on the main requirements to reach such challenging targets. To account for interdependencies between the electricity market and the rest of the economy, different models were used to account for feedback loops with all other sectors. We include scenarios with different runtimes and retrofit costs for existing nuclear plants to determine the effects of a prolongation of nuclear power plants in Germany. Key findings for the electricity sector include the importance of a European-wide coordinated electricity grid extension and the exploitation of regional comparative cost effects for renewable sites. Due to political restrictions, nuclear energy will not be available in Germany in 2050. However, the nuclear life-time extension has a positive impact on end consumer electricity prices as well as economic growth in the medium term, if retrofit costs do not exceed certain limits.