Optimal policy identification: Insights from the German electricity market
The diffusion of renewable electricity generating technologies is widely considered as crucial for establishing a sustainable energy system in the future. However, the required transition is unlikely to be achieved by market forces alone. For this reason, many countries implement various policy instruments to support this process, also by re-distributing related costs among all electricity consumers. This paper presents a novel history-friendly agent-based study aiming to explore the efficiency of different mixes of policy instruments by means of a Differential Evolution algorithm. Special emphasis of the model is devoted to the possibility of small scale renewable electricity generation, but also to the storage of this electricity using small scale facilities being actively developed over the last decade. Both combined pose an important instrument for electricity consumers to achieve partial or full autarky from the electricity grid, particularly after accounting for decreasing costs and increasing efficiency of both due to continuous innovation. Among other things, we find that the historical policy mix of Germany introduced too strong and inflexible demand-side instruments (like feed-in tariff) too early, thereby creating strong path-dependency for future policy makers and reducing their ability to react to technological but also economic shocks without further increases of the budget.
|Date of creation:||2016|
|Contact details of provider:|| Web page: http://www.wiwi.kit.edu/|
More information through EDIRC
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.:
- Volkmar Lauber & Lutz Mez, 2004. "Three Decades of Renewable Electricity Policies in Germany," Energy & Environment, , vol. 15(4), pages 599-623, July.
- del Río, Pablo & Bleda, Mercedes, 2012. "Comparing the innovation effects of support schemes for renewable electricity technologies: A function of innovation approach," Energy Policy, Elsevier, vol. 50(C), pages 272-282.
- Liu, Wen & Lund, Henrik & Mathiesen, Brian Vad, 2011. "Large-scale integration of wind power into the existing Chinese energy system," Energy, Elsevier, vol. 36(8), pages 4753-4760.
- Karoline S. Rogge & Kristin Reichardt, 2015. "Going Beyond Instrument Interactions: Towards a More Comprehensive Policy Mix Conceptualization for Environmental Technological Change," SPRU Working Paper Series 2015-12, SPRU - Science and Technology Policy Research, University of Sussex.
- Cludius, Johanna & Hermann, Hauke & Matthes, Felix Chr. & Graichen, Verena, 2014. "The merit order effect of wind and photovoltaic electricity generation in Germany 2008–2016: Estimation and distributional implications," Energy Economics, Elsevier, vol. 44(C), pages 302-313.
- Roe, Brian & Teisl, Mario F. & Levy, Alan & Russell, Matthew, 2001. "US consumers' willingness to pay for green electricity," Energy Policy, Elsevier, vol. 29(11), pages 917-925, September.
- Giorgio Fagiolo & Andrea Roventini, 2012.
"Macroeconomic Policy in DSGE and Agent-Based Models,"
Revue de l'OFCE,
Presses de Sciences-Po, vol. 0(5), pages 67-116.
- Giorgio Fagiolo & Andrea Roventini, 2012. "Macroeconomic Policy in DSGE and Agent-Based Models," Post-Print hal-01385833, HAL.
- Giorgio Fagiolo & Andrea Roventini, 2012. "Macroeconomic Policy in DSGE and Agent-Based Models," Working Papers 07/2012, University of Verona, Department of Economics.
- Giorgio Fagiolo & Andrea Roventini, 2012. "Macroeconomic Policy in DSGE and Agent-Based Models," EconomiX Working Papers 2012-17, University of Paris Nanterre, EconomiX.
- Aghion, Philippe & David, Paul A. & Foray, Dominique, 2009. "Science, technology and innovation for economic growth: Linking policy research and practice in 'STIG Systems'," Research Policy, Elsevier, vol. 38(4), pages 681-693, May.
- David, Paul & Aghion, Philippe, 2008. "Science, Technology and Innovation for Economic Growth: Linking Policy Research and Practice in "STIG Systems"," MPRA Paper 12096, University Library of Munich, Germany.
- Kalkuhl, Matthias & Edenhofer, Ottmar & Lessmann, Kai, 2012. "Learning or lock-in: Optimal technology policies to support mitigation," Resource and Energy Economics, Elsevier, vol. 34(1), pages 1-23.
- Matthias Kalkuhl & Ottmar Edenhofer & Kai Lessmann, 2011. "Learning or Lock-in: Optimal Technology Policies to Support Mitigation," CESifo Working Paper Series 3422, CESifo Group Munich.
- Nick Johnstone & Ivan Haščič & David Popp, 2010. "Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(1), pages 133-155, January.
- Nick Johnstone & Ivan Hascic & David Popp, 2008. "Renewable Energy Policies And Technological Innovation: Evidence Based On Patent Counts," NBER Working Papers 13760, National Bureau of Economic Research, Inc.
- Fischer, Carolyn & Newell, Richard G., 2008. "Environmental and technology policies for climate mitigation," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 142-162, March.
- Fischer, Carolyn & Newell, Richard, 2004. "Environmental and Technology Policies for Climate Mitigation," Discussion Papers dp-04-05, Resources For the Future.
- Lehmann, Paul, 2013. "Supplementing an emissions tax by a feed-in tariff for renewable electricity to address learning spillovers," Energy Policy, Elsevier, vol. 61(C), pages 635-641.
- Sundt, Swantje & Rehdanz, Katrin, 2015. "Consumers' willingness to pay for green electricity: A meta-analysis of the literature," Energy Economics, Elsevier, vol. 51(C), pages 1-8.
- Sundt, Swantje & Rehdanz, Katrin, 2014. "Consumer's willingness to pay for green electricity: A meta-analysis of the literature," Kiel Working Papers 1931, Kiel Institute for the World Economy (IfW).
- Dani Rodrik, 2014. "Green industrial policy," Oxford Review of Economic Policy, Oxford University Press, vol. 30(3), pages 469-491.
- Jacobsson, Staffan & Lauber, Volkmar, 2006. "The politics and policy of energy system transformation--explaining the German diffusion of renewable energy technology," Energy Policy, Elsevier, vol. 34(3), pages 256-276, February.
- Winkler, Ralph, 2005. "Structural change with joint production of consumption and environmental pollution: a neo-Austrian approach," Structural Change and Economic Dynamics, Elsevier, vol. 16(1), pages 111-135, March.
- Eric Guerci & Mohammad Ali Rastegar & Silvano Cincotti, 2010. "Agent-based modeling and simulation of competitive wholesale electricity markets," Post-Print halshs-00871063, HAL.
- Steffen, Bjarne, 2012. "Prospects for pumped-hydro storage in Germany," Energy Policy, Elsevier, vol. 45(C), pages 420-429.
- Lehmann, Paul & Gawel, Erik, 2013. "Why should support schemes for renewable electricity complement the EU emissions trading scheme?," Energy Policy, Elsevier, vol. 52(C), pages 597-607.
- Lehmann, Paul & Gawel, Erik, 2011. "Why should support schemes for renewable electricity complement the EU emissions trading scheme?," UFZ Discussion Papers 5/2011, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
- Paul Grauwe, 2011. "Animal spirits and monetary policy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 47(2), pages 423-457, June.
- Blueschke-Nikolaeva, V. & Blueschke, D. & Neck, R., 2012. "Optimal control of nonlinear dynamic econometric models: An algorithm and an application," Computational Statistics & Data Analysis, Elsevier, vol. 56(11), pages 3230-3240.
- Viktoria Blüschke-Nikolaeva & Dmitri Blüschke & Reinhard Neck, 2010. "Optimal Control of Nonlinear Dynamic Econometric Models: An Algorithm and an Application," Working Papers 032, COMISEF.
- Weidlich, Anke & Veit, Daniel, 2008. "A critical survey of agent-based wholesale electricity market models," Energy Economics, Elsevier, vol. 30(4), pages 1728-1759, July.
- Tesfatsion, Leigh & Judd, Kenneth L., 2006. "Handbook of Computational Economics, Vol. 2: Agent-Based Computational Economics," Staff General Research Papers Archive 10368, Iowa State University, Department of Economics.
- Ivan Savin & Dmitri Blueschke, 2016. "Lost in Translation: Explicitly Solving Nonlinear Stochastic Optimal Control Problems Using the Median Objective Value," Computational Economics, Springer;Society for Computational Economics, vol. 48(2), pages 317-338, August.
- Blueschke, D. & Blueschke-Nikolaeva, V. & Savin, I., 2013. "New insights into optimal control of nonlinear dynamic econometric models: Application of a heuristic approach," Journal of Economic Dynamics and Control, Elsevier, vol. 37(4), pages 821-837.
- D. Blueschke & V. Blueschke-Nikolaeva & Ivan Savin, 2012. "New Insights Into Optimal Control of Nonlinear Dynamic Econometric Models: Application of a Heuristic Approach," Jena Economic Research Papers 2012-008, Friedrich-Schiller-University Jena.
- Safarzyńska, Karolina & Frenken, Koen & van den Bergh, Jeroen C.J.M., 2012. "Evolutionary theorizing and modeling of sustainability transitions," Research Policy, Elsevier, vol. 41(6), pages 1011-1024.
- Elisa Lanzi & Ivan Haščič & Nick Johnstone, 2012. "The Determinants of Invention in Electricity Generation Technologies: A Patent Data Analysis," OECD Environment Working Papers 45, OECD Publishing.
- Sensfuß, Frank & Ragwitz, Mario & Genoese, Massimo & Möst, Dominik, 2007. "Agent-based simulation of electricity markets: a literature review," Working Papers "Sustainability and Innovation" S5/2007, Fraunhofer Institute for Systems and Innovation Research (ISI).
- Cantner, Uwe & Graf, Holger & Herrmann, Johannes & Kalthaus, Martin, 2016. "Inventor networks in renewable energies: The influence of the policy mix in Germany," Research Policy, Elsevier, vol. 45(6), pages 1165-1184.
- Uwe Cantner & Holger Graf & Johannes Herrmann & Martin Kalthaus, 2014. "Inventor Networks in Renewable Energies: The Influence of the Policy Mix in Germany," Jena Economic Research Papers 2014-034, Friedrich-Schiller-University Jena, revised 28 Jan 2016.
- Unruh, Gregory C., 2000. "Understanding carbon lock-in," Energy Policy, Elsevier, vol. 28(12), pages 817-830, October.
- Karolina Safarzyńska & Jeroen Bergh, 2013. "An evolutionary model of energy transitions with interactive innovation-selection dynamics," Journal of Evolutionary Economics, Springer, vol. 23(2), pages 271-293, April.
- Dr. Ulrike Lehr & Dr. Thomas Drosdowski, 2015. "Soziale Verteilungswirkungen der EEG-Umlage unter Berücksichtigung von Einkommensklassen," GWS Discussion Paper Series 15-1, GWS - Institute of Economic Structures Research.
- Bode, Sven & Groscurth, Helmuth-Michael, 2006. "The Effect of the German Renewable Energy Act (EEG) on "the Electricity Price"," HWWA Discussion Papers 358, Hamburg Institute of International Economics (HWWA).
- Malerba, Franco & Nelson, Richard & Orsenigo, Luigi & Winter, Sidney, 2008. "Public policies and changing boundaries of firms in a "history-friendly" model of the co-evolution of the computer and semiconductor industries," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 355-380, August.
- Franco Malerba & Richard Nelson & Luigi Orsenigo & Sidney Winter, 2007. "Public Policies and Changing Boundaries of Firms in a "History Friendly" Model of the Co-evolution of the Computer and Semiconductor Industries," KITeS Working Papers 201, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jun 2007.
- Lindman, Åsa & Söderholm, Patrik, 2012. "Wind power learning rates: A conceptual review and meta-analysis," Energy Economics, Elsevier, vol. 34(3), pages 754-761.
- Colmenar-Santos, Antonio & Campíñez-Romero, Severo & Pérez-Molina, Clara & Castro-Gil, Manuel, 2012. "Profitability analysis of grid-connected photovoltaic facilities for household electricity self-sufficiency," Energy Policy, Elsevier, vol. 51(C), pages 749-764.
- Lopolito, A. & Morone, P. & Taylor, R., 2013. "Emerging innovation niches: An agent based model," Research Policy, Elsevier, vol. 42(6), pages 1225-1238.
- Luthander, Rasmus & Widén, Joakim & Nilsson, Daniel & Palm, Jenny, 2015. "Photovoltaic self-consumption in buildings: A review," Applied Energy, Elsevier, vol. 142(C), pages 80-94.
- Grau, Thilo & Huo, Molin & Neuhoff, Karsten, 2012. "Survey of photovoltaic industry and policy in Germany and China," Energy Policy, Elsevier, vol. 51(C), pages 20-37.
- Thilo Grau & Molin Huo & Karsten Neuhoff, 2011. "Survey of Photovoltaic Industry and Policy in Germany and China," Discussion Papers of DIW Berlin 1132, DIW Berlin, German Institute for Economic Research.
- Wiser, Ryan H., 2007. "Using contingent valuation to explore willingness to pay for renewable energy: A comparison of collective and voluntary payment vehicles," Ecological Economics, Elsevier, vol. 62(3-4), pages 419-432, May.
- Faber, Malte & Proops, John L. R., 1991. "The innovation of techniques and the time-horizon: A neo-Austrian approach," Structural Change and Economic Dynamics, Elsevier, vol. 2(1), pages 143-158, June.
- J. Farmer & Cameron Hepburn & Penny Mealy & Alexander Teytelboym, 2015. "A Third Wave in the Economics of Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(2), pages 329-357, October.
- Garavaglia, Christian, 2010. "Modelling industrial dynamics with "History-friendly" simulations," Structural Change and Economic Dynamics, Elsevier, vol. 21(4), pages 258-275, November.
- Zahedi, A., 2006. "Solar photovoltaic (PV) energy; latest developments in the building integrated and hybrid PV systems," Renewable Energy, Elsevier, vol. 31(5), pages 711-718.
- Ringler, Philipp & Keles, Dogan & Fichtner, Wolf, 2016. "Agent-based modelling and simulation of smart electricity grids and markets – A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 205-215.
- Steinmueller, W. Edward, 2013. "The pre-industrial energy crisis and resource scarcity as a source of transition," Research Policy, Elsevier, vol. 42(10), pages 1739-1748.
- Flanagan, Kieron & Uyarra, Elvira & Laranja, Manuel, 2011. "Reconceptualising the 'policy mix' for innovation," Research Policy, Elsevier, vol. 40(5), pages 702-713, June.
- Hoppmann, Joern & Huenteler, Joern & Girod, Bastien, 2014. "Compulsive policy-making—The evolution of the German feed-in tariff system for solar photovoltaic power," Research Policy, Elsevier, vol. 43(8), pages 1422-1441.
- Sensfuß, Frank & Ragwitz, Mario & Genoese, Massimo, 2008. "The merit-order effect: A detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany," Energy Policy, Elsevier, vol. 36(8), pages 3076-3084, August.
- SafarzyÅ„ska, Karolina & van den Bergh, Jeroen C.J.M., 2017. "Integrated crisis-energy policy: Macro-evolutionary modelling of technology, finance and energy interactions," Technological Forecasting and Social Change, Elsevier, vol. 114(C), pages 119-137.
- Kverndokk, Snorre & Rosendahl, Knut Einar, 2007. "Climate policies and learning by doing: Impacts and timing of technology subsidies," Resource and Energy Economics, Elsevier, vol. 29(1), pages 58-82, January.
- Candelise, Chiara & Winskel, Mark & Gross, Robert J.K., 2013. "The dynamics of solar PV costs and prices as a challenge for technology forecasting," Renewable and Sustainable Energy Reviews, Elsevier, vol. 26(C), pages 96-107. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:zbw:kitwps:87. 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: (ZBW - German National Library of Economics)
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.