Maria Kopsakangas-Savolainen

Comparing Welfare Effects of Different Regulation Schemes: An Application to the Electricity Distribution Industry

We compare the welfare effects of different regulation schemes of electricity distribution utilities. The compared regulation schemes are Fixed Price regulation, Cost of Service regulation, Menu of Cost-Contingent Contracts and Simple Menu of Contracts. In our calculations we utilize the information of a firms potential to improve cost efficiency. The firm-specific cost information of Finnish electricity distribution utilities is obtained by using various Stochastic Frontier models. Our basic result is that welfare can be improved by changing the Cost of Service regulation scheme to the Menu of Contracts regulation. Welfare also increases in the case of Fixed Price regulation and Simple Menu of Contract regulation. There is however, a significant difference among regulation regimes on how this improved welfare is distributed to consumers and producers.

Promotion of Market Access for Renewable Energy in the Nordic Power Markets

This study investigates how renewable targets for the Nordic power market might be achieved at the lowest costs. The instruments investigated are fixed Feed-In Tariff, economically sound premium based Feed-In Tariff and shadow-prices for CO 2 emissions. We utilize a Real-Time Price based simulation model in the analysis. We show that even with strong assumptions regarding the Emission Permit Price the targeted level of wind power is not reached without Feed-In Tariffs. Emission Trading produces the lowest total emissions but with the highest total costs. From the studied instruments the most cost-efficient way to reach the targets for wind energy market shares is the premium based Feed-In Tariff. This tariff is also the most cost-efficient way to reduce CO 2 emissions. Copyright Springer Science+Business Media B.V. 2013

The welfare effects of different pricing schemes for electricity distribution in Finland

The main components of electricity prices can be divided into the wholesale price, the price of network operations and taxes. Even if the wholesale price is determined efficiently, total welfare can be significantly disturbed if network operations are priced inefficiently. In this study, we calculate network prices based on four alternative methods. These are marginal cost pricing, Ramsey pricing, FDC-pricing and optimal two-part tariffs. The welfare effects on the prevailing pricing system are compared. We show that potentially significant improvements in welfare can be achieved by using marginal cost prices or optimal two-part tariffs. Also Ramsey pricing indicates that prevailing prices are inefficient.

P2P model for distributed energy trading, grid control and ICT for local smart grids

This paper provides a view to Peer-to-Peer (P2P) approach for smart grid operation adopted in P2P-SmarTest project. It provides an overview on solutions proposed for distributed P2P energy trading, P2P grid control and wireless communication enabling the proposed P2P operation. The paper proposes some business models that can be adopted in a P2P setting. We also outline the barriers and enablers against and for adopting local or regional P2P based electricity operations.

Hourly-Based Greenhouse Gas Emissions of Electricity – Possibilities for Households and Companies to Decrease Their Emissions

The various emissions, including GHG emissions, from electricity production are a crucial part of environmental impact assessments of any kinds of products, services and consumption. Usually average annual emissions are used, but electricity market has lately increased interest in daily-based and hourly-based emission coefficients for electricity. In such markets, where technology mixture of the production includes technologies with widely different emission factors, there is potential for large variation in hourly based emission factors and consequently this offers potential for decreasing GHG emissions by efficient real-time based demand management. In this paper, we determine hourly based GHG emission factors and give examples how GHG emissions may be decreased in households and companies by changing the use patterns, and consequently timing of electricity use, the total amount of electricity consumption being unchanged. Electricity production in Finland, as well as the electricity consumption in Finnish households and companies are used as the cases. The examples from households and companies indicate the potential of managing hourly based demand loads and resulting GHG emissions. So far hourly-based emission coefficients have not been used (at least in significant amounts) in demand management in order to reduce emissions and mitigate climate change.

Hydropower Production Profiles: Impacts on Capacity Structure, Emissions, and Windfall Profits

Production structure in markets with a significant role of hydropower is sensitive to the production profile of hydropower. In this paper we utilize a long-run oriented real-time price based simulation model to analyze through scenarios the impact of different hydropower production profiles on the total annual energy consumed, prices, and capacity structure. We also show the relation between different hydropower production profiles and emissions, costs, and windfall profits. There seems to be no superior scenario under which all socially desirable goals are achieved as there is a clear tradeoff between allowing high windfall profits with highest cost efficiency and achieving the target for lower emissions.

The Importance of Transnational Impacts of Climate Change in a Power Market

We contribute to the discussion on transnational impacts of climate change by analysing the potential cross-border impacts of possible climate change driven changes in the hydropower potential. We analyse this in the context of the Nordic countries where Norway and Sweden are likely to gain hydropower potential and Finland is likely to experience transnational impacts. We use an economic simulation model of the Nordic power market and a dynamic optimization model for hydropower to study the impact of climate change to the production mix, the price of electricity, consumption of electricity and emissions from electricity production. We show that climate change might further strengthen the price reducing effect that the renewables have on the prices in the Nordic market and further decrease the profitability of power production. The emissions per consumed energy unit is going to be decreased mainly because of the decreasing share of the thermal production in the system. However, increased hydropower production reduces prices which in turn increases demand. This rebound effect somewhat dampens the emission reduction. Our results shows that transnational impacts of climate change can be significant and stresses the importance of assessing climate change impacts to power systems also at the international level.