Who Benefits from Cooperation? - A Numerical Analysis of Redistribution Effects Resulting from Cooperation in European RES-E Support
AbstractThis paper numerically analyzes redistribution effects resulting from cooperation among European countries in achieving the 2020 targets for electricity generation from renewable energy sources (RES-E). The quantification of redistribution effects builds on the theoretical analysis by Unteutsch (2014), who shows that cooperation in RES-E support increases overall welfare but is not beneficial for all groups. In this paper, we use a dynamic investment and dispatch optimization model of the European electricity system to investigate which groups potentially benefit from cooperation and which groups would be worse off compared to a situation in which national RES-E targets are reached solely by domestic RES-E production. In the analysis, cooperation in RES-E support is implemented as a European-wide green certificate trading scheme. Main findings of the analysis include that in the European electricity system, effects of the change in the certificate price in most countries would overcompensate for the effects of the change in the wholesale electricity price. Thus, in most countries with comparatively high (low) generation costs for renewable energies, consumer rents increase (decrease) due to cooperation and producers yield lower (higher) profits. In addition, it is found that the magnitude of redistribution effects between the individual groups is quite large: In some countries, the change in consumer rents or producer profits resulting from cooperation is nearly twice as high as the overall welfare effect of cooperation in the whole European electricity system. Moreover, we find that the sign, but not always the magnitude, of redistribution effects is quite robust to different developments of interconnector extensions, the CO2 price and RES-E investment costs.
Download InfoIf 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.
Bibliographic InfoPaper provided by Energiewirtschaftliches Institut an der Universitaet zu Koeln in its series EWI Working Papers with number 2014-2.
Length: 40 pages
Date of creation: 20 Jan 2014
Date of revision:
Contact details of provider:
Postal: Vogelsanger Str. 321, Alte Wagenfabrik, 50827 Köln
Phone: ++ 49 (0) 221 277 29 100
Fax: ++ 49 (0) 221 277 29 400
Web page: http://www.ewi.uni-koeln.de/
More information through EDIRC
Cooperation Mechanisms; Tradable Green Certi ficates; Welfare; Consumer Rent; Producer Profi t; Power System Optimization;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- F19 - International Economics - - Trade - - - Other
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
- Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-15 (All new papers)
- NEP-ENE-2014-03-15 (Energy Economics)
- NEP-EUR-2014-03-15 (Microeconomic European Issues)
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.:
- Nagl, Stephan, 2013. "Prices vs. Quantities: Incentives for Renewable Power Generation - Numerical Analysis for the European Power Market," EWI Working Papers 2013-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
- Nagl, Stephan & Fürsch, Michaela & Lindenberger, Dietmar, 2012. "The costs of electricity systems with a high share of fluctuating renewables - a stochastic investment and dispatch optimization model for Europe," EWI Working Papers 2012-1, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
- Karsten Neuhoff & Stefan Bach & Jochen Diekmann & Martin Beznoska & Tarik El-Laboudy, 2013. "Distributional Effects of Energy Transition: Impacts of Renewable Electricity Support in Germany," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
- Fürsch, Michaela & Hagspiel, Simeon & Jägemann, Cosima & Nagl, Stephan & Lindenberger, Dietmar & Tröster, Eckehard, 2012. "The role of grid extensions in a cost-efficient transformation of the European electricity system until 2050," EWI Working Papers 2012-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
- Aune, Finn Roar & Dalen, Hanne Marit & Hagem, Cathrine, 2012. "Implementing the EU renewable target through green certificate markets," Energy Economics, Elsevier, vol. 34(4), pages 992-1000.
- Klessmann, Corinna & Lamers, Patrick & Ragwitz, Mario & Resch, Gustav, 2010. "Design options for cooperation mechanisms under the new European renewable energy directive," Energy Policy, Elsevier, vol. 38(8), pages 4679-4691, August.
- Lion Hirth & Falko Ueckerdt, 2012. "Redistribution Effects of Energy and Climate Policy: The Electricity Market," Working Papers 2012.82, Fondazione Eni Enrico Mattei.
- Pineau, Pierre-Olivier & de Villemeur, Étienne, 2009.
"Environmentally Damaging Electricity Trade,"
TSE Working Papers
09-118, Toulouse School of Economics (TSE).
- Amundsen, E.S. & Mortensen, J.B., 2001. "The Danish Green Certificate System: Some Simple Analytical Results," Norway; Department of Economics, University of Bergen 226, Department of Economics, University of Bergen.
- Richter, Jan, 2011. "DIMENSION - A Dispatch and Investment Model for European Electricity Markets," EWI Working Papers 2011-3, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
- Fürsch, Michaela & Hagspiel, Simeon & Jägemann, Cosima & Nagl, Stephan & Lindenberger, Dietmar & Tröster, Eckehard, 2013. "The role of grid extensions in a cost-efficient transformation of the European electricity system until 2050," Applied Energy, Elsevier, vol. 104(C), pages 642-652.
- Agnolucci, Paolo, 2007. "The effect of financial constraints, technological progress and long-term contracts on tradable green certificates," Energy Policy, Elsevier, vol. 35(6), pages 3347-3359, June.
- Amundsen, Eirik S. & Mortensen, Jorgen Birk, 2001. "The Danish Green Certificate System: some simple analytical results," Energy Economics, Elsevier, vol. 23(5), pages 489-509, September.
- Unteutsch, Michaela, 2014. "Redistribution Effects Resulting from Cross-Border Cooperation in Support for Renewable Energy," EWI Working Papers 2014-1, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
- Menanteau, Philippe & Finon, Dominique & Lamy, Marie-Laure, 2003. "Prices versus quantities: choosing policies for promoting the development of renewable energy," Energy Policy, Elsevier, vol. 31(8), pages 799-812, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monika Schmid).
If references are entirely missing, you can add them using this form.