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(Showing results 1 to 9 of 9)



Evaluating Alternative Energy Policies: An Example Comparing Transportation Energy Investments

James K. Binkley, Wallace E. Tyner, and Marie E. Matthews

Year: 1983
Volume: Volume 4
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No2-7
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Abstract:
Designing appropriate programs to deal with present and future energy problems faced by the United States has created a need for the evaluation and comparison of different policies. An important component of this is the generation of accurate information concerning the benefits and costs of alternative courses of action. Energy analysis is enormously complex, however, due to the pervasive influence of energy throughout the economy and the manifold factors that must be considered. Schmalensee has written that "discussions of energy policy, especially as regards new technologies, tend rapidly to become unwieldy because of the large number of serious complicating factors whose relevance is arguable" (1980, pp. 2-3). As a result of these complications, any information available to evaluate alternative energy policies Will almost of necessity be incomplete.



Energy-Efficiency Investments and Public Policy

Adam B. Jaffe and Robert N. Stavins

Year: 1994
Volume: Volume15
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No2-3
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Abstract:
Concern about carbon dioxide as a greenhouse gas has focused renewed attention on energy conservation because fossil fuel combustion is a major source of CO2 emissions. Since it is generally acknowledged that energy use could be significantly reduced through broader adoption of existing technologies, policy makers need to know how effective various policy instruments might be in accelerating the diffusion of these technologies. We examine the factors that determine the rate of diffusion, focusing on (i) potential market failures: information problems, principal-agent slippage, and unobserved costs, and (ii) explanations that do not represent market failures: private information costs, high discount rates, and heterogeneity among potential adopters. Through a series of simulations we explore how alternative policy instruments--both economic incentives and more conventional, direct regulations-could hasten the diffusion of energy-conserving technologies.



Regulation of an Electric Power Transmission Company

Thomas-Olivier Leautier

Year: 2000
Volume: Volume21
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol21-No4-3
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Abstract:
Designing regulatory contracts for the operators of power transmission networks has become a critical policy issue in the United States. In this paper, a regulatory contract is proposed that induces network operators to optimally expand the grid, which is crucial for the emergence of efficient wholesale power markets, while also satisfying the other traditional regulatory objectives. The proposed mechanism is readily implementable, since it builds on a contract currently in place in England and Wales.



Demand-Side Management and Energy Efficiency in the United States

David S. Loughran and Jonathan Kulick

Year: 2004
Volume: Volume 25
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol25-No1-2
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Abstract:
Between 1989 and 1999, U.S. electric utilities spent $14.7 billion on demand-side management (DSM) programs aimed at encouraging their customers to make investments in energy efficiency. This study relies on panel data on 324 utilities spanning 11 years to estimate the effect of DSM expenditures on retail electricity sales. Our estimates imply that DSM had a much smaller effect on retail electricity sales than do estimates reported by utilities themselves over the same study period.



How Does Climate Policy Affect Technical Change? An Analysis of the Direction and Pace of Technical Progress in a Climate-Economy Model

Carlo Carraro, Emanuele Massetti, Lea Nicita

Year: 2009
Volume: Volume 30
Number: Special Issue #2
DOI: 10.5547/ISSN0195-6574-EJ-Vol30-NoSI2-2
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Abstract:
This paper analyses whether and how a climate policy designed to stabilize greenhouse gases in the atmosphere is likely to change the direction and pace of technical progress. The analysis is performed using an upgraded version of WITCH, a dynamic integrated regional model of the world economy. In this version, a non-energy R&D sector, which enhances the productivity of the capital-labor aggregate, has been added to the energy R&D sector included in the original WITCH model. We find that, as a consequence of climate policy, R&D is re-directed towards energy knowledge. Nonetheless, total R&D investments decrease, due to a more than proportional contraction of non-energy R&D. Indeed, when non-energy and energy inputs are weakly substitutable, the overall contraction of the economic activity associated with a climate policy induces a decline in total R&D investments. However, enhanced investments in energy R&D and in the energy sector are found not to �crowd-out� investments in non-energy R&D.



Investments in Imperfect Power Markets under Carbon Pricing: A Case Study Based Analysis

Michael Pahle, Kai Lessmann, Ottmar Edenhofer, and Nico Bauer

Year: 2013
Volume: Volume 34
Number: Number 4
DOI: 10.5547/01956574.34.4.10
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Abstract:
This article addresses the question of how investments in imperfectly competitive electricity markets interact with a price on carbon. The analysis is based on a dynamic numerical Cournot model calibrated to the German market and focuses on (a) the level of investments and technology choice and (b) welfare impacts under optimal carbon pricing. As a special feature, we also restrict access to one technology (coal) to strategic players ("technological market power"). The main results are: (a) In the long-run prices reach competitive levels due to entry by the competitive fringe. If technological market power prevails, this can only be accomplished through high carbon prices. (b) Investment levels and technology choice show different patterns under market power and perfect competition. (c) Apart from driving investments, carbon pricing also renders old carbon-intensive capacities unprofitable and thus induces more extensive fleet turnover. (d) Welfare almost always increases as a result of carbon pricing.



Nuclear Capacity Auctions

Sven-Olof Fridolfsson and Thomas P. Tangeras

Year: 2015
Volume: Volume 36
Number: Number 3
DOI: 10.5547/01956574.36.3.sfri
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Abstract:
We propose nuclear capacity auctions as a means to correcting the incentives for investing in nuclear power. In particular, capacity auctions open the market for large-scale entry by outside firms. Requiring licensees to sell a share of capacity as virtual power plant contracts increases auction efficiency by mitigating incumbent producers' incentive to bid for market power. A motivating example is Sweden's policy reversal to allow new nuclear power to replace old reactors.



A New Perspective: Investment and Efficiency under Incentive Regulation

Rahmatallah Poudineh and Tooraj Jamasb

Year: 2015
Volume: Volume 36
Number: Number 4
DOI: 10.5547/01956574.36.4.rpou
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Abstract:
Following the liberalisation of the electricity industry since the early 1990s, many sector regulators have adopted incentive regulation aided by benchmarking and productivity analysis. This approach has often resulted in efficiency and quality of service improvement. However, there remains a growing concern as to whether the utilities invest sufficiently and efficiently in maintaining and modernising their networks. This paper studies the relationship between investments and cost efficiency in the context of incentive regulation with ex-post regulatory treatment of investments using a panel dataset of 129 Norwegian distribution companies from 2004 to 2010. We introduce the concept of "no impact efficiency" as a revenue-neutral efficiency effect of investment under incentive regulation that makes a firm "investment efficient" in cost benchmarking. Also, we estimate the observed efficiency effect of investments and compare these with the no impact efficiency. Finally, we discuss the implications of cost benchmarking for investment behaviour of network companies.



Market Design for Long-Distance Trade in Renewable Electricity

Richard Green, Danny Pudjianto, Iain Staffell and Goran Strbac

Year: 2016
Volume: Volume 37
Number: Bollino-Madlener Special Issue
DOI: 10.5547/01956574.37.SI2.agia
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Abstract:
While the 2009 EU Renewables Directive allows countries to purchase some of their obligation from another member state, no country has yet done so, preferring to invest locally even where load factors are very low. If countries specialised in renewables most suited to their own endowments and expanded international trade, we estimate that system costs in 2030 could be reduced by 5%, or €15 billion a year, after allowing for the costs of extra transmission capacity, peaking generation and balancing operations needed to maintain electrical feasibility. Significant barriers must be overcome to unlock these savings. Countries that produce more renewable power should be compensated for the extra cost through tradable certificates, while those that buy from abroad will want to know that the power can be imported when needed. Financial Transmission Rights could offer companies investing abroad confidence that the power can be delivered to their consumers. They would hedge short-term fluctuations in prices and operate much more flexibly than the existing system of physical point-to-point rights on inter-connectors. Using FTRs to generate revenue for transmission expansion could produce perverse incentives to under-invest and raise their prices, so revenues from FTRs should instead be offset against payments under the existing ENTSOE compensation scheme for transit flows. FTRs could also facilitate cross-border participation in capacity markets, which are likely to be needed to reduce risks for the extra peaking plants required.





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