Ole Jess Olsen

Cogeneration and taxation in a liberalized Nordic power market

Abstract Cogeneration of power and district heating is a feasible and environmentally attractive technology in the Nordic countries. The production costs of six cogeneration technologies — including both fossil fuels and biomass — are calculated and compared to the production costs of five technologies for power generation. The division of common costs is determined according to realistic back-stop technologies for the district heating market. The consequences of different tax regimes are included in the analysis. Five of the six cogeneration technologies have generation costs that are lower than the expected average price on the recently liberalized Nordic power market. Common environmental taxes will improve the position of cogeneration.

Consumer Ownership in Liberalized Electricity Markets. The Case of Denmark

The continuation of consumer ownership has been an important part of the Danish electricity reform from 1999. Consumer ownership refers to either a consumer co-operative or a municipal utility. Contrary to conventional wisdom, consumer ownership can be supported by solid arguments from modern economic theory of organization. These arguments are presented and confronted with both present and future situation in Denmark. The development of the electricity supply industry after the Second World War has emptied consumer ownership of much of its original content. Nowadays, most consumers consider their electric utility as the (monopoly) supplier of a good they demand and not as something they own. Therefore, obligatory consumer ownership as specified in the new Danish Electricity Act of 1999 cannot be relied on to guarantee security of supply and reasonable prices for small consumers

Competition and Market Power in Northern Europe

This book focuses on the diversity of electricity reforms in Western Europe, drawing evidence from ten European Union memberstates plus Norway and Switzerland as associate members. The contributors analyse the various ways of introducing competition in the European electricity industries, and consider both the strategies of electricity companies and their behaviour in electricity marketplaces. They also offer an explanation of the differences of reforms by the institutions and the industrial structures of each country which shape the types of marketrules, industrial restructuring and public service regulations which have been adopted.

The Danish Electricity Reform - Success or Failure?

The European market directive from 1996 was only reluctantly implemented in Denmark in 1999. This is not different from a number of other member countries. However, the approach to liberalisation was more radical than in other reluctant countries. We address three tenets in standard market implementation: market power, restructuring, and regulation of the network monopoly. Even if the Danish market reform gets very good marks in the EU benchmarking, there have been major problems in all three areas. As for market power, the Danish Competition Authority has accused two large generators of abuse. Restructuring of the sector has been prevented by lengthy discussions on ownership. The most spectacular problem arose in the implementation of new incentive regulation of the distribution system operators. A combination of income caps and benchmarking was obviously mal-functioning and had to be abandoned in 2004. In the article we furthermore address the remedies recently introduced to cure the malaises.

Design of grid tariffs in electricity systems with variable renewable energy and power to heat

Large shares of variable renewable energy (VRE), requires flexibility solutions are developed. Considerable flexibility potentials exist from large consumers, e.g. power-to-heat (P2H) in district heating (DH). However, the existing grid tariffs obliterate the price signals from the wholesale electricity market and diminish the business cases for these technologies by increasing the costs of their electricity consumption. With the present tariff structure, only a very small part of the flexibility potential is deployed or operated flexible. In this paper we compare two different grid tariff designs that facilitate more flexible energy demand of DH operators. This is illustrated by a case study of Denmark that clearly demonstrates that the introduction of innovative tariffs will improve the business case for flexible P2H technologies and increase the value of VRE. In this way larger flexibility potentials can be induced and larger shares of VRE become integrated in the energy systems.

Regulatory Reform of Public Utilities in a Comparative Perspective - The Case of Denmark

The paper examines the following questions: What are the main reasons for the different regulatory approaches to the liberalisation of telecommunications and electricity supply? In which directions are the regulation of the two industries developing presently? Furthermore, to what extent have the policies implemented been successful? Finally, is there a relationship between the modes of regulation and the rates of success in the two sectors? The basic answers in the paper are that the differences in regulation primarily rest on the differences in the techno-economic structures of the two industries, but that some degree of convergence between the modes of regulation has occurred lately. With respect to the rate of success, the achievements are most obvious in telecommunications where consumers benefit from lower prices and more options, while the gains are more debatable in the case of electricity. Regarding the relationship between the modes of regulation and the rates of success, the overall answer is that there is a stronger relationship between the techno-economic structures of the two sectors, on the one hand, and the modes of regulation and rates of success respectively, on the other hand, than between the different modes of regulation and the rates of success.