China’s energy—challenges and strategies

In this century, China started facing five major challenges in the energy field: energy supply, shortage of liquid fuel, environmental pollution, green house gas (GHG) emission, and energy supply in rural areas. In this paper, the Chinese energy development strategy and general technical scheme (including energy conservation, utilization of coal, alternative fuel and renewable energy) are discussed, and some key scientific problems in the fundamental research of energy are put forward.     

Merit-order effects of renewable energy and price divergence in California’s day-ahead and real-time electricity markets

We answer two policy questions: (1) what are the estimated merit-order effects of renewable energy in the California Independent System Operator’s (CAISO’s) day-ahead market (DAM) and real-time market (RTM)? and (2) what causes the hourly DAM and RTM prices to systematically diverge? The first question is timely and relevant because if the merit-order effect estimates are small, California’s renewable energy development is of limited help in cutting electricity consumers’ bills but also has a lesser adverse impact on the state’s investment incentive for natural-gas-fired generation. The second question is related to the efficient market hypothesis under which the hourly RTM and DAM prices tend to converge. Using a sample of about 21,000 hourly observations of CAISO market prices and their fundamental drivers during 12/12/2012–04/30/2015, we document statistically significant estimates (p-value≤0.01) for the DAM and RTM merit-order effects. This finding lends support to California’s adopted procurement process to provide sufficient investment incentives for natural-gas-fired generation. We document that the RTM-DAM price divergence partly depends on the CASIO’s day-ahead forecast errors for system loads and renewable energy. This finding suggests that improving the performance of the CAISO’s day-ahead forecasts can enhance trading efficiency in California’s DAM and RTM electricity markets.     

Restructuring of Turkey’s electricity market and the share of hydropower energy: The case of the Eastern Black Sea Basin

This paper presents the historical development of Turkey’s electricity power sector, the efforts for introducing competition in the power industry in Turkey, and the concerns regarding restructuring in Turkey. The contribution of the hydropower energy potential in Turkey to the reconstruction of the electricity structure in Turkey is also investigated. Then, among the 25 hydrological basins in Turkey, the Eastern Black Sea Basin located in the northeast of Turkey, which has great advantages from the view point of small hydropower potential or hydropower potential without storage, is chosen as the case study to carry out some investigations concerning its potential and to analyze the contribution of the private sector (the corporate body) in regard to the development of hydro potential in this basin within the scope of the 4628 Electricity Market Law. With this law, concerning the restructuring of the electricity market, private sector investments in this segment have increased. In total, 1524 hydroelectric power projects with 22 360 MW installed capacity has been implemented until January 22nd, 2009 and this figure is continuously rising.     

Does renewable energy generation decrease the volatility of electricity prices? An analysis of Denmark and Germany

Although variable renewable energy (VRE) technologies with zero marginal costs decrease electricity prices, the literature is inconclusive about how the resulting shift in the supply curves impacts price volatility. Because the flexibility to respond to high peak and low off-peak prices is crucial for demand-response applications and may compensate for the losses of conventional generators caused by lower average prices, there is a need to understand how the penetration of VRE affects volatility. In this paper, we build distributed lag models with Danish and German data to estimate the impact of VRE generation on electricity price volatility. We find that in Denmark wind power decreases the daily volatility of prices by flattening the hourly price profile, but in Germany it increases the volatility because it has a stronger impact on off-peak prices. Our analysis suggests that access to flexible generation capacity and wind power generation patterns contribute to these differing impacts. Meanwhile, solar power decreases price volatility in Germany. By contrast, the weekly volatility of prices increases in both areas due to the intermittency of VRE. Thus, policy measures for facilitating the integration of VRE should be tailored to such region-specific patterns.     

The optimal use of renewable energy sources—The case of the new international “Makedonia” airport of Thessaloniki,Greece

Energy requirements in Greece have been continuously increasing in the past three decades. The share of renewable energy sources use has not kept up with the increase in energy demand. As a result more and more conventional energy sources are used and in this case lignite which is an indigenous source of energy and natural gas, imported from Russia. This energy picture leads towards a greater environmental impact due to the increase of pollutants to the atmosphere. It has been the objective of the European Union to satisfy 22.1% of its electric energy needs by the year 2010 with renewable energy sources. In the year of 1997 only 13.9% were satisfied with renewable energy. For Greece the corresponding figure was 8.6%. Renewable energy sources could cover a major part, if not all, of Thessaloniki's “Makedonia” airport needs, following the promising results of the recent renewable energy sources exploration in the region. The airport “Makedonia” is located a few kilometres south of the city of Thessaloniki on the coastline of Thessaloniki's bay. In this work an optimization model has been developed to determine the optimum share of renewable energy sources in various end-uses such as heating, cooling, and lighting. In this model the reliability and environmental parameters were taken into consideration. The renewable energy sources include solar energy, geothermal energy and biomass.     

The role of hydrogen and fuel cells to store renewable energy in the future energy network – potentials and challenges

The penetration of renewable energy sources is expected to rapidly increase from 15% to 50% in 2050 due to their vital contribution to the global energy requirements, sustainability and quality of life in economical, environmental and health aspects. This huge rise highlights the necessity of development of energy storage systems, especially for intermittency renewable energies such as solar photovoltaic and wind turbine, in order to balance the energy network. In this study, renewable energy options including pumped hydro, pressurized air, flywheels, Li ion batteries, hydrogen and super-capacitors are compared based on a specific set of criteria. The criteria considered are energy/power density, ease of integration with the existing energy network, cost effectiveness, durability, efficiency and safety. Our study showed that storing renewable energy sources in the form of hydrogen through the electrolysis process is ranked as the most promising option considering the mentioned criteria. It brings about several benefits suggesting that hydrogen and fuel cells are promising contributors towards a more sustainable future, both in energy demand and environmental sustainability.     

Assessing the impact of renewable energy sources on the electricity price level and variability – A quantile regression approach

The literature on renewable energy sources indicates that an increase of the intermittent wind and solar generation affects significantly the distribution of electricity prices. In this article, the influence of two types of renewable energy sources (wind and solar photo voltaic) on the level and variability of German electricity spot prices is analyzed. The quantile regression models are built to estimate the merit order effect for different quantiles of electricity prices. The results indicate that both types of renewable generations have a similar, negative impact on the price level, approximated by the price median. When the price volatility, measured by the inter-quantile range (IQR), is considered, the outcomes show that wind and solar influence prices differently. Conditional on the level of the total demand, the wind generation would either increase (when the demand is low) or decrease (when the demand is high) the IQR. Meanwhile, the increase of solar power stabilizes the price variance for moderate demand level. Thus, policy supporting the development and integration of RES should search for a balance between the wind and solar power.     

The future of the European electricity system and the impact of fluctuating renewable energy – A scenario analysis

The ongoing transformation of the European energy system comes along with new challenges, notably increasing amounts of power generation from intermittent sources like wind and solar. How current objectives for emission reduction can be reached in the future and what the future power system will look like is, however, not fully clear. In particular, power plant investments in the long run and power plant dispatch in the short run are subject to considerable uncertainty. Therefore an approach is presented which allows electricity market development to be assessed in the presence of stochastic power feed-in and endogenous investments in power plants and renewable energies. To illustrate the range of possible future developments, five scenarios for the European electricity system up to 2050 are investigated. Both generation investments and dispatch as well as utilization of transmission lines are optimized for these scenarios and additional sensitivity analyses are carried out.     

Lobbying the ‘Energiewende’. Assessing the effectiveness of strategies to promote the renewable energy business in Germany

The article examines the influence of renewable energy companies on the decision-making process related to the German energy transition. It identifies clusters of different lobbying activities and styles through in depth interviews with 20 stakeholders from policy-making and business. The research used Repertory Grid Technique in combination with HOMALS multivariate analysis. Its main findings are: First, although the big four electric utilities operating on the German energy market still possess wide influence, companies of renewable energy have developed from a niche into important players of the energy regime. Second, lobbies by the renewable energy sector are mainly aimed at the legislative framework, particularly on the Renewable Energy Sources Act and the feed-in-system. Third, interviewees identified 36 different lobby activities; the most effective ones are: ‘Regular and personal maintenance of contact to politicians’, ‘Lobbying within an association’, ‘Knowledge development with correct information’ and ‘Top-down contacting of most powerful politicians’. Fourth, the statistical analysis reveals clear distinctions between companies with regards to their lobby strategies which are evaluated differently by stakeholders. Finally, the article concludes that companies have a strong influence on political-decision making and – together with governmental actors – form a ‘policy network’ that strongly shapes the German energy transition.     

Quantifying the effect of renewable generation on day–ahead electricity market prices: The Spanish case

The penetration of renewable generation has grown since the electricity sector has been deregulated. To account for that, this paper proposes a methodology to estimate the downward effect of renewable generation participation upon the day-ahead electricity market prices, since such an effect is quite intuitive observing the merit order of the generating units. The European Electricity Market Matching Algorithm (EMMA) is currently based on Euphemia (Price Coupling of Regions), though there are several differences among countries across Europe. The new algorithm proposed uses market orders, which include aggregate hourly orders such as aggregate supply and demand curves. These orders are simple orders and the marginal price is affected by complex orders, especially by the minimum income condition (MIC) used in the Iberian Electricity Market and considered in our proposed algorithm. A case study of the Spanish day-ahead electricity market is evaluated for 2015, for which a daily generation sample is composed of 16 days in 2015. The sample is created following the characteristics of thermal production, renewable production and inframarginal production. The conclusions are drawn comparing the simulations of the real marginal prices and the new marginal prices after incorporating renewable generation participation into the aggregate demand curve at the maximum price.     

The impact of intermittently renewable energy on Italian wholesale electricity prices: Additional benefits or additional costs?

Most studies of the literature find that the development of renewable energy sources determines a decrease in the wholesale prices. Some authors use this finding to state that the current subsidies for renewable technologies cannot be considered as excessive. By carrying out a hybrid analysis (both simulation and ex-post empirical analyses) of the case of photovoltaic energy in Italy, this article demonstrates that this result cannot be generalised. Under market power, an increase in PV production can provide benefits in terms of a wholesale price decrease only beyond a specific threshold and especially if combined with other effects. Otherwise, it is likely that PV development could imply an increase in prices. Therefore, on the one hand, caution is necessary when using the estimated change in wholesale prices to evaluate the net cost for consumers of the supporting policies for renewables: either the simulation-based models or the full empirical analyses may be misleading. On the other hand, if "decarbonisation" is the main objective, the energy policies should be designed in order to assure a deep and balanced penetration of the clean technologies, regardless of their estimated transitory impact on wholesale prices (and in the meantime reviewing the organisation of power markets).     

The impact of government subsidies and enterprises’ R&D investment: A panel data study from renewable energy in China

In this research, we aim to understand the influence of government subsidies on enterprises’ research and development (R&D) investment behavior, particularly in China’s renewable energy sector. We are also interested in examining how the attributes of enterprise ownership act as a moderating variable for the relationship between government subsidies and R&D investment behavior. Three classical panel data analysis models including the pooled ordinary least squares (OLS) model, the fixed effect model and the random effect model are employed. We find that government subsidies have a significant crowding out influence on enterprises’ R&D investment behavior and that the influence is further moderated by the attributes of enterprise ownership. Moreover, a panel threshold regression model is used to demonstrate how the influence of government subsidies on enterprises’ R&D investment behavior will change when government subsidies increase. Two thresholds, 0.6% and 10.1%, are identified. We recommend that relevant government departments should motivate enterprise R&D investment behavioral intention by increasing subsidies within a certain range. Different attributes of enterprise ownership should also be considered as part of policy reform and re-structuring relating to government subsidies.     

Coal,nuclear and renewable energy policies in Germany: From the 1950s to the “Energiewende”

Over the last 50 years, German energy policy has ranged from strong enthusiasm for both coal and nuclear energy to deep skepticism. The most dramatic changes with respect to energy policies have occurred as a response to nuclear accidents, yet the accidental and unintended effects of coal policies are also important in influencing the trajectory. The newly emerging climate debate prevented the coal industry from acting as a substitute for the diminishing share of nuclear power. In 2011 the conservative government announced the Energiewende (‘energy transformation’) and decided to reduce the amount of fossil fuels from 80% of the energy supply to 20% by 2050. However, while the verdict on nuclear was unequivocal with a final phase-out date of 2022, the share of coal in the electricity market did not decrease and the amount of carbon dioxide released into the air slightly increased from 2011 to 2013. There are growing conflicts over the immediate costs and practicalities of coal replacement. Consequently, the future of coal in Germany is still relatively open and contested.     

The roles of inter-fuel substitution and inter-market contagion in driving energy prices: Evidences from China’s coal market

Coal has been dominating energy supply and consumption in China, with the country becoming the largest energy supplier and consumer worldwide. Due to inter-fuel substitution of crude oil and inter-market contagion of international coal market, China's coal price might be interrelated with crude oil price and international coal price. However, the precise roles of these two effects in determining China's coal price are unknown. This paper contributes to previous literature by investigating this issue. We find that co-movements between China's coal price and crude oil price largely hinge on the shares of oil and coal in China’s energy mix, while its co-movements with international coal price depend on scales of coal trade. Inter-fuel substitution dominated the interaction of China's coal market with other energy types, but the importance of inter-market contagion has been increasing. We also find that China might have become an originator for driving the returns of crude oil and international coal, in particular after 2008. Furthermore, China's coal market is still a net volatility recipient for shocks from both crude oil market and international coal market. Given the increased integration of global energy markets, we anticipate this paper to provide a better understanding on the dynamic changes in China's coal prices.     

A missing link? The case of Norway and Sweden: Does increased renewable energy production impact domestic greenhouse gas emissions?

This article examines how the EU׳s RES directive¹ will impact domestic greenhouse gas emissions in Norway and Sweden by 2020. The directive aims for a higher RES share in the energy consumption mix, and Norway and Sweden have established a common electricity certificate scheme to help achieve these RES goals. In terms of how these two national RES plans will impact domestic emissions by 2020, factors such as nuclear power, consumption changes and the energy balance must be considered. The most practical approach to evaluate the plans’ impact on emissions is to focus on changes in carbon-based consumption within the three directive sectors.The Norwegian RES action plan will not affect domestic emissions unless the electricity surplus generated by the certificate market is used to phase out fossil fuels in domestic sectors beyond the scope of the RES directive. The use of electricity to phase out fossil fuel consumption in the offshore sector would substantially reduce Norwegian emissions figures. The Swedish plan would positively impact Swedish greenhouse gas emissions; however, this impact is limited, primarily because a substantial increase in energy consumption is expected.     

Sustainable energy transition: the case of the Swedish pulp and paper industry 1973–1990

By employing historical case study methodology, this paper examines the transition towards renewable energy and increased energy efficiency in the Swedish pulp and paper industry (PPI) during the 1970s and 1980s. Between 1973 and 1990, CO₂ emissions were cut by 80 % in this sector, and this was mainly achieved by substituting away from oil to biofuels in the form of by-products from the pulp manufacturing process. The CO₂ reduction was also a result of energy efficiency improvements and increased internal production of electricity through back-pressure turbine power generation. Sweden was highly dependent on oil at the advent of the first Oil Crisis in 1973, and the increased oil prices put pressure on the Swedish government and the energy-intensive PPI to reduce this oil dependency. Of central importance for the energy transition was the highly collaborative strategy of the PPI, both internally among pulp mills as well as between the sector as a whole and the corporatist Swedish state administration. The Swedish government chose a proactive strategy by emphasizing knowledge management and collaboration with the industry along with the substitution of internal biofuels for oil. The transition was also characterized by a strong focus on unutilized potentials in the PPI; a previous waste problem now could be transformed into energy savings and improved energy efficiency. Energy taxes and fees also played an important role in Swedish energy policy during the 1970s and the 1980s. All in all, the study illustrates the central role of governments and their ability to push industrial sectors into new technological pathways through a wide palette of mutually reinforcing policy instruments. The results further point at the importance of a more holistic understanding of the interplay between different policies and their impacts in the longer run.     

Demographic determinants of Canada’s households’ adoption of energy efficiency measures: observations from the Households and Environment Survey, 2013

In addition to a growing and aging population, Canada has experienced large shifts in its residential sector. There are more households, homes are larger with less people in them, and there are more appliances per household, all of which contribute to increased energy consumption. The present work explores the demographic determinants of residential energy efficiency adoption using the 2013 Households and Environment Survey. With binary logistic regressions, we predicted the odds of households adopting three energy-efficient actions: energy-saving lights, programmable thermostats, and changes to a dwelling following an energy audit. Although it was found that Canadian households are participating in energy efficiency, not all groups are participating equally. Similar to previous research, seniors appear to be more inclined to adopt less challenging measures such as energy-saving lights, as opposed to more intensive dwelling upgrades. Additionally, levels of education and income were positively related to the adoption of energy efficiency measures. However, the results showed household income to be less of a contributing factor for decisions regarding dwelling changes compared to the financial incentives offered via government grants. The results suggest a need to increase energy efficiency education and to continue offering financial incentives as the country increases its residential energy efficiency.     

Potentialities of energy generation from waste and feedstock produced by the agricultural sector in Brazil: The case of the State of Paraná

The State of Paraná contributes significantly for the Brazilian production of sugar cane, ethanol, soybeans and pigs. In addition to the current production of ethanol, the State has a huge potential for electricity, biodiesel and biogas production. This paper presents an overview of the current situation regarding energy generation from the agricultural sector in the State, an assessment of the potentialities of energy generation from sugar cane residues and pig agricultural chains, as well as an analysis of the socioeconomic factors underlying the availability of feedstock for biodiesel production. This study has shown that it is possible to expand the energy supply in the State using residual biomass from the sugar cane and pig production. On the other side, the biodiesel production increase in the State will depend on the expansion in the consumption of products that use the cake as raw material; the increase in the feedstock availability other than canola, castor beans and sunflower; the increase of the number of family farmers as feedstock providers, so as to ensure access for biodiesel producers to the Social Fuel Stamp.     

The unbundling regime for electricity utilities in the EU: A case of legislative and regulatory capture?

Theory and empirics suggest that by curbing competition, incumbent electricity companies which used to be, and here are referred to as, Vertically Integrated Utilities (VIUs), can increase their profitability through combined ownership of generation and transmission and/or distribution networks. Because curbing competition is generally believed to be welfare-reducing, EU law requires unbundling (separation) of the VIU networks. However, the EU allows its member states the choice between incomplete (legal) and complete (ownership) unbundling. There is tantalizing anecdotal evidence that VIUs have tried to influence this choice through questionable means of persuasion. Such means of persuasion should be more readily available in countries with a more corrupted political culture. This paper shows that among the old EU member states, countries which are perceived as more corrupt are indeed more likely to apply weaker forms of unbundling. Somewhat surprisingly, we do not obtain a similar finding for the EU member states that acceded in 2004. We provide a conjecture for this observation.