Large-scale wind power in European electricity markets: Time for revisiting support schemes and market designs?

This paper questions whether current renewable support schemes and electricity market designs are well-suited to host a significant amount of wind energy. Our analysis aims at finding the right equilibrium between market signals received by wind generators and their intrinsic risks. More market signals are needed to give the right incentives for reducing wind integration costs but should not undermine the effectiveness of support schemes. Although several alternatives combining support schemes and market signals could improve the current situation in terms of market signals and risks, feed-in premium support scheme seems actually to be the more balanced option. Furthermore, an adequate sharing of wind generation technical responsibility between the system operator and wind power producers can help to control wind integration costs even in the absence of accurate market signals.     

Estimating the public’s value of implementing the CO2 emissions trading scheme in Korea

The Korean government set out the carbon dioxide (CO₂) emissions reduction target as 30% below business-as-usual by 2020. The CO₂ emissions trading scheme (ETS) was initiated in January 2015 to meet this target. We attempt to estimate the public's value of implementing the ETS for CO₂ emissions reduction. We apply the contingent valuation (CV) method using the willingness to pay (WTP) data obtained from a national CV survey of 1000 randomly selected households. The survey was conducted via in-person interviews. Value judgments required of the respondents were within their abilities. The mean WTP to achieve the stated target of CO₂ emissions reduction using ETS is estimated to be KRW 1873 (USD 1.66) per household per month, which is statistically significant at the 1% level. The aggregate national value amounts to KRW 409.2 billion (USD 363.4 million) per year. Thus, even though Korea has no obligations to cut emissions under the Kyoto protocol, the public is willing to bear a financial burden to implement the ETS. If its cost is less than this value, implementing the ETS can be socially profitable. The results of this study can serve as a basis for further policy discussions and decisions.     

More competition: Threat or chance for financing renewable electricity?

The paper examines how increased competition in electricity markets may reshape the future electricity generation portfolio and its potential impact on the renewable energy (RE) within the energy mix. The present analysis, which is based on modelling investor behaviour with a time horizon up to 2030, considers the economic aspects and conditions for this development with a particular focus on the photovoltaics. These aspects include pure financial/investment factors, such as the expected returns in the sector, subsidisation of certain RE resources and other policies focusing on the energy sector (liberalisation, environmental policies and security of supply considerations). The results suggest that policies aiming at the expansion of renewable energy technologies and strengthening the competition in the electricity markets have mutually reinforcing effects. More competition can reduce the financial burden of the existing renewable support schemes and consequently help to achieve the already established RE targets.     

Green electricity in Belgium : An experimental ground for the future EU market?

The green electricity market is rapidly developing on an international scale, with an ever-increasing concentration of trade at the EU level. In this article Geert Palmers, of 3E NV in Belgium presents his viewpoint on the market mechanisms necessary to prepare for this international trade, while maintaining the subsidiarity at the demand side of the market, and maintaining the ambitions of a recent EU White Paper on this subject.     

Does electricity price matter for innovation in renewable energy technologies in China?

Though the development of renewable energy is rapid, innovation in renewable energy technologies is relatively weak due to the late commencement of renewable energy in China. In addition, renewable energy is mainly introduced into the supply mix of electricity generation, which increases the costs of electricity generation. Higher electricity price will make renewable energy more competitive and call forth renewable energy technological innovation. Based on FMOLS and DOLS models, as well as PMG model, this paper investigates the induced long and short run effects of electricity price, funding support, and economic growth on innovation in renewable energy technologies at the provincial level in China during the period 2006–2016. The Conclusions drawn were: (1) R&D expenditure and economic growth have positive impacts on innovation in renewable energy technologies in the long and short run; (2) Electricity price only has a long run effect on patenting in renewable energy technologies; (3) In the long run, a 1% increase in electricity price can lead to a 0.7825%–1.0952% increase in the patent counts of renewable energy technologies; (4) Electricity pricing system in China does not play any role in driving renewable energy technological innovation in the short run.     

Can the future EU ETS support wind energy investments?

This article discusses how the future Emissions Trading Scheme legislation should be designed to allow the European Union to comply with the 20% CO₂ emissions reduction target, while at the same time promoting wind energy investments. We examine whether CO₂ prices could eventually replace the existing support schemes for wind and if they adequately capture its benefits. The analysis also looks at the effectiveness of the clean development and joint implementation mechanisms to trigger wind projects and technology transfer in developing countries. We find out that climate policy is unlikely to provide sufficient incentives to promote wind power, and that other policies should be used to internalise the societal benefits that accrue from deploying this technology: CO₂ prices can only reflect the beneficial impact of wind on climate change but not its contribution to the security of supply or employment creation. A minimum price of around €40/tCO₂ should be attained to maintain present support levels for wind and this excludes income risks and intermediation costs. Finally, CDM improves the return rate of wind energy projects in third countries, but it is the local institutional framework and the long-term stability of the CO₂ markets that matters the most.     

Who invests in renewable electricity production? Empirical evidence and suggestions for further research

Transforming energy systems to fulfill the needs of a low-carbon economy requires large investments in renewable electricity production (RES-E). Recent literature underlines the need to take a closer look at the composition of the RES-E investor group in order to understand the motives and investment processes of different types of investors. However, existing energy policies generally consider RES-E investments made on a regional or national level, and target investors who evaluate their RES-E investments according to least-cost high-profit criteria. We present empirical evidence to show that RES-E investments are made by a heterogeneous group of investors, that a variety of investors exist and that their formation varies among the different types of renewable sources. This has direct implications for our understanding of the investment process in RES-E and for the study of motives and driving forces of RES-E investors. We introduce a multi-dimensional framework for analyzing differences between categories of investors, which not only considers to the standard economic dimension which is predominant in the contemporary energy literature, but also considers the entrepreneurship, innovation-adoption and institutional dimensions. The framework emphasizes the influence of four main investor-related factors on the investment process which should be studied in future research: motives, background, resources and personal characteristics.     

Matching policy and people? Household responses to the promotion of renewable electricity

In this paper, we study the responses among households to the promotion of renewable electricity. We analyse an experiment conducted by a Norwegian power company that offered Guarantees of Origin of supply to 5,000 of their customers. In the experiment, five different groups of 1,000 customers each received information about a renewable electricity certificate and how to purchase it. The information and the reasons given for why the customers should accept the offer was framed differently to each of the groups. The experiment produced minimal responses, and we use material from focus group discussions and in-depth interviews for interpreting and explaining the results. The analysis shows that customers tend to disregard information coming from their supplier, while there is also a low degree of commensurability between the message presented in the information and the understandings and perceptions held by the customers. For example, whereas the information contained the argument that customers must purchase certificates to obtain renewable electricity, Norwegians, because of their awareness of the country’s hydro-based production system, perceive electricity to be renewable as it is. Additionally, focus group participants found the presented terms and figures to be incomprehensible to the extent that the information can be said to have produced ignorance in them. In turn, this negatively affected people’s trust in the message and also its sender, as relevance and reliability are disclosure’s main challenges in Norway. We use the case of electricity labelling in Norway to demonstrate some of the general challenges associated with using information as a tool for changing people’s consumption patterns in deregulated energy markets.     

The EU Renewables Directive—What is the fuss about trading?

Considerable argument about trading in green electricity certificates (GECs) preceded the publication of the proposed EU Renewables Directive in early 2008. The proposed Directive set a binding target of 20 per cent of EU energy to be derived from renewable energy by 2020 broken down into targets for each member state. Those arguing for trade in green certificates, called certificates of guaranteed origin (GO), included major electricity companies. However, the idea of mandatory trading was opposed by the main renewable energy industry lobby groups. The proposed Directive limited trading in accordance with the demands of the renewables industry pressure groups. Analysis suggests that if member states were forced to trade to achieve a mandatory target of 20 per cent target, then GEC prices would rise to high levels because the demand for tradeable certificates would be much higher than their supply. Trading is unlikely to improve the prospects for meeting the targets. A system of nationally based ‘feed-in tariff’ systems would not face the problems of uncertain certificate prices faced by compulsory trading in GECs.     

What is the global potential for renewable energy?

World energy demand is projected to rise to 1000 EJ (EJ = 10¹⁸ J) or more by 2050 if economic growth continues its course of recent decades. Both reserve depletion and greenhouse gas emissions will necessitate a major shift from fossil fuels as the dominant energy source. Since nuclear power is now unlikely to increase its present modest share, renewable energy (RE) will have to provide for most energy in the future. This paper addresses the questions of what energy levels RE can eventually provide, and in what time frame. We find that when the energy costs of energy are considered, it is unlikely that RE can provide anywhere near a 1000 EJ by 2050. We further show that the overall technical potential for RE will fall if climate change continues. We conclude that the global shift to RE will have to be accompanied by large reductions in overall energy use for environmental sustainability.     

The European renewable energy target for 2030 – An impact assessment of the electricity sector

The European Union set binding targets for the reduction of greenhouse gases (GHG) and the share of renewable energy (RE) in final energy consumption by 2020. The European Council agreed to continue with this strategy through to 2030 by setting a RE target of 27% in addition to a GHG reduction target of 40%. We provide a detailed sectoral impact assessment by analyzing the implications for the electricity sector in terms of economic costs and the regional distribution of investments and shares of electricity generated from renewable energy sources (RES-E). According to the Impact Analysis by the European Commission the 27% RE target corresponds to a RES-E share of 49%. Our model-based sensitivity analysis on underlying technological and institutional assumptions shows that the cost-effective RES-E share varies between 43% and 56%. Secondly, we quantify the economic costs of these variants and those which would be incurred with higher shares. The long-term additional costs for higher RES-E shares would be less than 1% of total system costs. The third aspect relates to the regional distribution of EU-wide efforts for upscaling renewables. We point out that delivering high RES-E shares in a cost-effective manner involves considerably different efforts by the Member States.     

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.     

Does the use of renewable energy sources mitigate CO2 emissions? A reassessment of the US evidence

Previous research on the determinants of CO₂ emissions has concluded that, although increasing nuclear energy consumption can help to mitigate emissions, increasing use of renewable energy sources is not effective in this regard. These studies, however, do not consider energy prices as a possible driver of energy demand (and hence of emissions) and we find that this omission and the choice of functional form materially alters the outcome in the US case. Specifically, our cointegration and Granger-causality test results indicate that CO₂ emission levels are negatively related to the use of renewable energy, but are unrelated to nuclear energy consumption.     

Assessment of the renewable energies potential for intensive electricity production in the province of Jaén,southern Spain

The foreseen depletion of the traditional fossil fuels for the forthcoming decades is forcing us to seek for new sustainable and non-pollutant energy sources. Renewable energies rely on a decentralized scheme strongly dependent on the local resources availability. In this work, we tackle the study of the renewable energies potential for an intensive electricity production in the province of Jaén (southern Spain) which has a pronounced unbalance between its inner electricity production and consumption. The potential of biomass from olive pruning residues, solar photovoltaics (PV) and wind power has been analyzed using Geographical Information System tools, and a proposal for a massive implementation of renewable energies has been arisen. In particular, we propose the installation of 5 biomass facilities, totaling 98 MW of power capacity, with an estimated annual production of 763 GWh, 12 PV facilities, totaling 420 MW of power capacity, with an estimated annual production of 656 GWh and 506 MW of wind power capacity in a number of wind farms, with an estimated annual production of 825 GWh. Overall, this production frame would meet roughly a 75% of the electricity demands in the province and thus would mitigate the current unbalance.     

Are the aims of increasing the share of green electricity generation and reducing GHG emissions always compatible?

Energy from waste (EfW) has been identified as a source of ‘green electricity’ and has been used as a way of reducing greenhouse gas (GHG) emissions. Nevertheless, selecting an EfW strategy for municipal solid waste management is a challenging task not least because of the uncertainty involved in quantifying the potential economic and environmental impacts. This paper analyses five alternatives for managing the municipal solid waste of Sydney for their ‘green electricity’ and GHG savings potential under conditions of uncertainty. The impact of paper recycling on the ranking of alternatives was investigated, too. Our analysis shows that maximizing EfW generation potential does not result in greater GHG saving. A combination of food and green waste composting, recycling of metals, paper, glass and plastics while only landfilling waste fractions that are not recyclable may result in the best GHG savings. Furthermore, recycling of paper does not always achieve the best outcome; anaerobic digestion or composting may yield better results from an environmental and energy generation perspective.     

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.     

Wind power and photovoltaic power: How to improve the accommodation capability of renewable electricity generation in China?

China's wind curtailment and photovoltaic curtailment was one of the prominent issues in 2014, and the renewable curtailment worsened in 2015. With the rapid growth of renewables, the phenomenon of the insufficiency in renewable accommodation capability is becoming more and more serious in 2016. In that case, the problem of the insufficient accommodation capability is pointed out by analyzing China's development requirements. The renewable power generation scale, the renewable power consumption, and the restrictions on the renewable electricity generation are discussed from the China's market perspective. Meanwhile, the legal environment, the planning requirement, the institutional setting, and the policy tools are introduced from the perspective of governmental regulation. An empirical analysis, a cause analysis and a trend analysis are illustrated before explaining the problem of renewable curtailment and proposing a solution for enhancing the accommodation capability. According to the analysis results, the solution for addressing the wind curtailment and PV curtailment is offered with respect to the technology, the institution, the legislation, and the political aspect. Through the research, the research conclusions are drew finally and the corresponding policy recommendations are put forward.     

«Would you say that the price you pay for electricity is fair?» Consumers' satisfaction and utility reforms in the EU15

The research question addressed by this paper is a simple one: are European consumers happy with the price they pay for electricity supply services after two decades of reforms? We focus on self-assessed consumers' satisfaction as reported in three waves of the Eurobarometer surveys, 2000-2002-2004, conditioning on a set of indicators of public ownership and liberalisation across the EU-15. After controlling for individual and country characteristics, we find that consumers are happier with the prices they pay when in their country there are both public ownership and liberalisation. We discuss this finding.     

Energy security and renewable electricity trade—Will Desertec make Europe vulnerable to the “energy weapon”?

Solar power imports to Europe from the deserts of North Africa, as foreseen in the Desertec concept, is one possible way to help decarbonising the European power sector by 2050. However, this approach raises questions of threats to European energy security in such an import scenario, particularly in the light of increasing import dependency and Russia's use of the “energy weapon” in recent years. In this paper we investigate the threat of North African countries using the Desertec electricity exports as an “energy weapon”. We develop and use a new model to assess the interdependence – the bargaining power symmetry, operationalised as costs – of a disruption in a future renewable electricity trade between North Africa and Europe. If Europe maintains current capacity buffers, some demand-response capability and does not import much more than what is described in the Desertec scenario, it is susceptible to extortion and political pressure only if all five exporter countries unite in using the energy weapon. Europe is not vulnerable to extortion by an export cut from only one country, as the European capacity buffers are sufficient to restore the power supply: no single exporter country would have sustained bargaining power over Europe.