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Hydropower Policy and Energy Saving Incentives

Author

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  • Pernille Parmer

    () (Department of Economics, Norwegian University of Science and Technology)

Abstract

Many Norwegian local governments are affected by hydropower production. A law passed in 1917 mandates that hydropower plants sell up to 10 percent of their power basis to local governments affected by the production. Historically, this concession power was meant to ensure the small rural local governments supply of electricity, in competition of the larger cities. Today, many local governments resell their concession power when prices are high and generate large revenues. However, the actual transferred concession power is restricted to general electricity consumption in the community. As a result, local governments with a positive gap between potential concession power and general electricity consumption have reduced incentives to save electricity. In other words, the concession power system has adverse effects on incentives for energy eciency. In this study, a simple two-period model to study energy efficiency is developed, and the model's predictions are supported by empirical findings. The results underline how misspecifed and outdated laws can reduce incentives for energy economizing projects.

Suggested Citation

  • Pernille Parmer, 2014. "Hydropower Policy and Energy Saving Incentives," Working Paper Series 16014, Department of Economics, Norwegian University of Science and Technology.
  • Handle: RePEc:nst:samfok:16014
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    File URL: http://www.svt.ntnu.no/iso/WP/2014/Parmer_2014wp.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Electricity comsumption; energy efficiency incentives; public sector; hydropower; laws;

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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