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.     

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.     

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).     

Why should support schemes for renewable electricity complement the EU emissions trading scheme?

In virtually all EU Member States, the EU Emissions Trading Scheme (EU ETS) is complemented by support schemes for electricity generation from renewable energy sources (RES-E). This policy mix has been subject to strong criticism. It is mainly argued that RES-E schemes contribute nothing to emissions reduction and undermine the cost-effectiveness of the EU ETS. Consequently, many scholars suggest the abolition of RES-E schemes. However, this conclusion rests on quite narrow and unrealistic assumptions about the design and performance of markets and policies. This article provides a systematic and comprehensive review and discussion of possible rationales for combining the EU ETS with RES-E support schemes. The first and most important reason may be restrictions to technology development and adoption. These may be attributed to the failure of markets as well as policies, and more generally to the path dependency in socio-technical systems. Under these conditions, RES-E schemes are required to reach sufficient levels of technology development. In addition, it is highlighted that in contrast to the EU ETS RES-E support schemes may provide benefits beyond mitigating climate change.     

LCA of renewable energy for electricity generation systems—A review

Sustainable development requires methods and tools to measure and compare the environmental impacts of human activities for various products (goods and services). Providing society with goods and services contributes to a wide range of environmental impacts. Environmental impacts include emissions into the environment and the consumption of resources as well as other interventions such as land use, etc. Life cycle assessment (LCA) is a technique for assessing environmental loads of a product or a system. The aim of this paper is to review existing energy and CO₂ life cycle analyses of renewable sources based electricity generation systems.The paper points out that carbon emission from renewable energy (RE) systems are not nil, as is generally assumed while evaluating carbon credits. Further the range of carbon emissions from RE systems have been found out from existing literature and compared with those from fossil fuel based systems, so as to assist in a rational choice of energy supply systems.     

Are government policies effective in promoting deployment of renewable electricity resources?

Using a panel data over 50 US states and years 1991–2007, this paper uses a state fixed-effects model with state-specific time-trends to estimate the effects of state policies on the penetration of various emerging renewable electricity sources, including wind, biomass, geothermal, and solar photovoltaic. Renewable portfolio standards with either capacity or sales requirements have a significant impact on the penetration of all types of renewables—however, this impact is variable depending on the type of renewable source: it is negative for combined renewables, wind, and biomass; and positive for geothermal and solar. Further, clean energy funds and required green power options mostly result in increasing the penetration of all types of renewables. On the other hand, voluntary renewable portfolio standards as well as state green power purchasing programs are found to be ineffective in increasing the penetration of any type of renewable source. Finally, economic variables, such as electricity price, natural gas price, and per capita GDP as well as structural variables, such as league of conservation voters rating and the share of coal-generated electricity are found to be generally insignificant, suggesting the crucial role of policy in increasing the penetration of renewables.     

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 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.     

Did residential electricity rates fall after retail competition? A dynamic panel analysis

A key selling point for the restructuring of electricity markets was the promise of lower prices. There is not much consensus in earlier studies on the effects of electricity deregulation in the U.S., particularly for residential customers. Part of the reason for not finding a consistent link with deregulation and lower prices was that the removal of transitional price caps led to higher prices. In addition, the timing of the removal of price caps coincided with rising fuel prices, which were passed on to consumers in a competitive market. Using a dynamic panel model, we analyze the effect of participation rates, fuel costs, market size, a rate cap and switch to competition for 16 states and the District of Columbia. We find that an increase in participation rates, price controls, a larger market, and high shares of hydro in electricity generation lower retail prices, while increases in natural gas and coal prices increase rates. We also find that retail competition makes the market more efficient by lowering the markup of retail prices over wholesale costs. The effects of a competitive retail electricity market are mixed across states, but generally appear to lower prices in states with high participation rates.     

Fuelwood: The “other” renewable energy source for Africa?

In recent years, increasing concerns over rising oil prices, supply shortfalls and the environmental impacts of fossil fuel use have fed growing interest in renewable energy sources for Sub-Saharan Africa. Although traditional biofuels already enjoy widespread popularity, their use has often been actively discouraged due to the lingering influence of “fuelwood crisis” era narratives. In particular, urban fuelwood consumption is frequently portrayed as a cause of environmental degradation leading to energy insecurity among low-income households, especially where the resource is commercialized. Such views have had significant influence among policy makers, often resulting in repressive forestry legislation. In contrast, however, a number of researchers have demonstrated that wood energy dependence is often not a significant cause of deforestation and can provide important livelihood opportunities. This article reassesses urban fuelwood sourcing and its impacts using a recent case study conducted by the authors in Maun, Botswana and results previously reported in the literature. Findings indicate that although harvesting is unregulated, its impacts are significantly mitigated by collectors' strong preferences for source sites with abundant dead wood, low competition and recognized access rights. As well, fuelwood vending is found to provide critical support to rural incomes and a key source of low-cost urban energy. As such, the benefits of fuelwood use and avoidance of negative effects will most effectively be achieved by decentralised management approaches that build on local institutions and understandings of the resource.     

Feedback on household electricity consumption: a tool for saving energy?

Improved feedback on electricity consumption may provide a tool for customers to better control their consumption and ultimately save energy. This paper asks which kind of feedback is most successful. For this purpose, a psychological model is presented that illustrates how and why feedback works. Relevant features of feedback are identified that may determine its effectiveness: frequency, duration, content, breakdown, medium and way of presentation, comparisons, and combination with other instruments. The paper continues with an analysis of international experience in order to find empirical evidence for which kinds of feedback work best. In spite of considerable data restraints and research gaps, there is some indication that the most successful feedback combines the following features: it is given frequently and over a long time, provides an appliance-specific breakdown, is presented in a clear and appealing way, and uses computerized and interactive tools.

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.     

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.     

Is there an optimum level for renewable energy?

Because continued heavy use of fossil fuel will lead to both global climate change and resource depletion of easily accessible fuels, many researchers advocate a rapid transition to renewable energy (RE) sources. In this paper we examine whether RE can provide anywhere near the levels of primary energy forecast by various official organisations in a business-as-usual world. We find that the energy costs of energy will rise in a non-linear manner as total annual primary RE output increases. In addition, increasing levels of RE will lead to increasing levels of ecosystem maintenance energy costs per unit of primary energy output. The result is that there is an optimum level of primary energy output, in the sense that the sustainable level of energy available to the economy is maximised at that level. We further argue that this optimum occurs at levels well below the energy consumption forecasts for a few decades hence.     

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 Spanish distribution system for oil products: an obstacle to competition?

This paper examines why the formal liberalization of the Spanish market for automotive fuels did not introduce competition in the sector. Against the background of the transformation of the country's oil industry, it is shown how the Spanish distribution system emerged as the essential facility within the formally liberalized oil products market. ‘Light-handed’ regulation, in combination with the prevailing ownership structure turned the system into an impediment to newcomers’ activities and to competition. This suggests that an evaluation of regulatory options for distribution systems in specific markets should take into due account crucial market characteristics like concentration and specific ownership/control relationships.     

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.     

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.     

Utilities’ business models for renewable energy: A review

The transformation of today's electric power sector to a more sustainable energy production based on renewable energies will change the structure of the industry. Consequently, utilities as the major stakeholders in this transformation will face new challenges in their way of doing business. They will have to adapt their business models to remain competitive in the new energy landscape. The present review of business model literature shows that two basic choices exist: utility-side business models and customer-side business models. The two approaches follow a very different logic of value creation. While the former is based on a small number of large projects, the latter is based on a large number of small projects. The article reveals that blueprints for utility-side business models are available, whereas customer-side business models are in an early stage of development. Applying the business model framework as an analytical tool, it is found that existing utility-side business models comprise a series of advantages for utilities in terms of revenue potential and risk avoidance. This study provides new insights about why utilities will favor utility-side business models over customer-side business models and why they also should engage in customer-side business models in their quest for more sustainable future business models.