Advanced Search
MyIDEAS: Login

Environmental policies in competitive electricity markets

Contents:

Author Info

  • Langestraat, R.

    (Tilburg University)

Registered author(s):

    Abstract

    Abstract: In this thesis we model and analyze several environmental policies in an existing mathematical representation of a perfectly competitive electricity market. We contribute to the literature by theoretically and numerically establishing a number of effects of environmental policies on investment strategies and prices. We provide a theoretical benchmark for environmental regulators aiming to achieve certain policy goals, and present a way to use numerical tools in case a complete theoretical analysis cannot be obtained. Two policies that charge firms for their carbon emissions, namely cap-and-trade and carbon taxation, are modeled into both a stylized deterministic and a two-stage stochastic framework. In the former we characterize equilibria, leading to key results on the dispatching order of technologies and identification of unused technologies. The latter framework is analyzed through a sampling study and focuses on the effectiveness of the policies in the presence of network limitations. We successively study a renewable energy obligation, which indirectly subsidizes electricity production from renewable resources through green certificates. We additionally explore the effects of technology banding, meaning that different renewable technologies are eligible for a different number of certificates. To account for some of the drawbacks of the existing UK technology banding system, we introduce an alternative banding policy. Finally, a feed-in tariff (FIT) is a direct subsidy on electricity production from renewable resources. In a stochastic framework we derive analytically that under linear cost assumptions, this price based instrument cannot guarantee that quantity based policy targets are met. Assuming non-linear convex cost, we find that the opposite holds and that a regulator has the freedom to set FITs in such a way that any desired mixture of renewable technologies can be attained at equilibrium. These FITs are derived analytically or, when necessary, estimated using the numerical tools that we propose.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://arno.uvt.nl/show.cgi?fid=132695
    Download Restriction: no

    Bibliographic Info

    Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-5930365.

    as in new window
    Length: 194
    Date of creation: 2013
    Date of revision:
    Publication status: Published
    Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-5930365

    Note: Dissertation
    Contact details of provider:
    Web page: http://www.tilburguniversity.edu/

    Related research

    Keywords:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Toke, David, 2011. "The UK offshore wind power programme: A sea-change in UK energy policy?," Energy Policy, Elsevier, vol. 39(2), pages 526-534, February.
    2. Verbruggen, Aviel & Lauber, Volkmar, 2012. "Assessing the performance of renewable electricity support instruments," Energy Policy, Elsevier, vol. 45(C), pages 635-644.
    3. Thure Traber & Claudia Kemfert, 2011. "Subsidies for Learning in Renewable Energy Technologies under Market Power and Emission Trading," Discussion Papers of DIW Berlin 1126, DIW Berlin, German Institute for Economic Research.
    4. Weitzman, Martin L, 1974. "Prices vs. Quantities," Review of Economic Studies, Wiley Blackwell, vol. 41(4), pages 477-91, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-5930365. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Economists Online Support).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.