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Analysing the impact of renewable energy regulation on retail electricity prices

Author

Listed:
  • Pablo del Rio

    (IPP-CSIC)

  • Pere Mir-Artigues

    (UdL & Energy Sustainability Research Group (UB))

  • Elisa Trujillo-Baute

    (University of Warwick & Barcelona Institute of Economics,Chair of Energy Sustainability)

Abstract

Retail electricity prices have substantially increased in the last decade in the European Union (EU) as a result of different regulations, raising the concern of policy makers. The growth in the support costs for electricity from renewable energy sources (RES-E) has often been singled out as a main driver of these prices. The aim of this paper is to analyse the degree of influence of RES-E promotion costs on the evolution of the retail price of electricity in the EU Member States. The analysis is carried out for households as well as for industry, with the help of a panel data econometric model. Our results show that the impact of renewable energy promotion costs on the retail electricity prices is positive and statistically significant, although relatively small. Differences across consumer types can be observed. An increase of 1% in those costs induces an average increase of only 0.023% in industrial retail prices and 0.008% in the residential retail prices. This impact on retail prices is mediated by the type of support scheme being adopted, with price-based support instruments showing a greater effect than quantity-based ones.

Suggested Citation

  • Pablo del Rio & Pere Mir-Artigues & Elisa Trujillo-Baute, 2016. "Analysing the impact of renewable energy regulation on retail electricity prices," Working Papers 2016/19, Institut d'Economia de Barcelona (IEB).
    • Handle: RePEc:ieb:wpaper:doc2016-19
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    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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