Association Webinars: The Clean Energy Package and Wind Curtailment - Club goods and the tragedy of the commons



  

 

The EU is a club to collectively charge for climate damage by charging for CO2 emissions through the Emissions Trading system and supporting increased renewables to deliver learning-by-doing spillovers under its Clean Energy Package. Members publish National Energy and Climate Plans setting out their targets for renewables, mainly wind and PV. At high levels of wind penetration, surplus wind that cannot be exported must be curtailed. Marginal curtailment is 3-4+ times the average curtailment, but even in an efficiently designed market, price signals for wind investment are given by average not marginal curtailment, creating a "tragedy of the commons" that requires a corrective charge to restore efficiency. The webinar presents a model calibrated to Ireland in 2026, showing the source of distortion, and derives new formulae for the capacity credit of wind, the learning subsidy and corrective charge needed to deliver the efficient level of renewables penetration, and estimates of their magnitude.

Speaker:

David Michael Newbery, Director of the Cambridge Energy Policy Research Group and Emeritus Professor of Applied Economics at the University of Cambridge. He is a Fellow of the British Academy and of the Econometric Society. He was President of the European Economic Association, 1996 and President of the International Association for Energy Economics, 2013. Educated at Cambridge with degrees in Mathematics and Economics, he has managed research projects on utility privatisation and regulation, road pricing, transition from state socialism to the market economy in central Europe, electricity restructuring and market design, transmission access pricing and has active research on market integration, transmission planning and finance, climate change policies, and the design of energy policy and energy taxation. Occasional economic advisor to Ofgem, Ofwat, and ORR, former member of the Competition Commission, chairman of the Dutch Electricity Market Surveillance Committee, and member of the Panel of Technical Experts offering quality assurance to DECC on the delivery of the UK’s Electricity Market, he is currently an independent member of the Single Electricity Market Committee of the island of Ireland, and a panel member of Ofgem’s Network Innovation Competition. His books include Privatization, Restructuring and Regulation of Network Utilities, and with Joe Stiglitz, The Theory of Commodity Price Stabilization: A Study in the Economics of Risk.

 

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