Thure Traber

Gone with the Wind? Electricity Market Prices and Incentives to Invest in Thermal Power Plants under Increasing Wind Energy Supply

The increased wind energy supplied to many electricity markets around the world has to be balanced by reliably ramping units or other complementary measures when wind conditions are low. At the same time wind energy impacts both, the utilization of thermal power plants and the market prices. While the market prices tend to decrease, the impact on the utilization of different plant types is at the outset unclear. To analyze the incentives to invest in thermal power plants under increased wind energy supply, we develop a computational model which includes ramping restrictions and costs and apply it to the German case. We find that due to current wind supply the market prices are reduced by more than five percent, and the incentives to invest in natural gas fired units are largely reduced. An increased wind supply erodes their attractiveness further. Consequently, a gap between the need for and the incentive to provide flexibility can be expected.

German nuclear phase-out policy: Effects on European electricity wholesale prices, emission prices, conventional power plant investments and eletricity trade

The German decision to finally phase-out nuclear electricity has led to a debate on its effects on electricity prices, emission prices in the European emission trading system, as well as on international electricity trade. We investigate these effects with a Electricity market model for Europe with investments in power plants under oligopolistic conditions in Germany. We find modest price increases on the German wholesale market by the mid-term 2020 and an effect of the accelerated nuclear phase- out of between four and twelve percent. Moreover, the increase in the emission allowance prices due to the change in nuclear policy is between 1:8 and 3 Euro per ton of CO2 by the same period. The large variations in our results are induced by four combinations of the European emission trading policy and the success of the German energy efficiency policy. Most pronounced price effects are found in scenarios with a successful energy savings policy, which acts as a substitute for new power plants. Moreover, the tighter the emission trading system is, the larger are the effects of the accelerated phase-out on electricity and emission prices. Under a tight system, however, investments in conventional generation are likely to be dominated by natural gas fired plants since the decrease of utilization rates induced by renewable energies are more important for coal fired power plants with their relative high investment costs.

Market Driven Power Plant Investment Perspectives in Europe: Climate Policy and Technology Scenarios until 2050 in the Model EMELIE-ESY

In the framework of the Energy Modeling Forum 28, we investigate how climate policy regimes affect market developments under different technology availabilities on the European power markets. We use the partial equilibrium model EMELIE-ESY with focus on electricity markets in order to determine how private investors optimize their generation capacity investment and operation over the horizon 2010 to 2050. For the year 2050, the model projects a minor increase of power consumption of 10% under current climate policy, and a balanced pathway for consumption under ambitious climate policy compared to 2010 levels. These results contrast with findings of POLES and PRIMES models that predict strong consumption increases of 44% to 48% by 2050 and claim competitiveness of nuclear power and CCS options. Under ambitious climate policy, our findings correspond with major increases of wholesale electricity market prices and comparatively less pronounced emission price increases, which trigger no investments into Carbon Capture and Storage (CCS) and a strongly diminishing share of nuclear energy.

Impact of market power on price effects of the German feed-in tariff under the European emission trading system

Most models that are used to analyze support policy for renewable electricity neglect at least one of the following aspects of the European market which are taken into account in our analysis: oligopolistic market behavior, emission trading, and restricted transmission capacities. We apply a computable partial equilibrium model and study the impact of the German policy under market power on the producer and consumer price and compare the results with those we get under the assumption of price taking behavior. Furthermore, in order to check the sensitivity we change the elasticity of demand. Two major findings can be reported. Firstly, the feed-in tariff increases the consumer price and decreases the price on the producer market, irrespective of the assumed elasticity and competition scenario. Secondly, we find that market power shifts the burden of support for renewable energy from producers to consumers when compared with price taking behavior of all actors.

Energiewende in Deutschland - Chancen und Herausforderungen

Vierteljahrshefte zur Wirtschaftsforschung | DIW Berlin | 82. Jahrgang | 03.2013 | Seiten 5–9 Der Begriff „Energiewende“ ist nicht eindeutig definiert. Er wurde und wird von verschiedenen Akteuren unterschiedlich verwendet und konnotiert. Im Rahmen dieses Beitrags und dieses Hefts im Allgemeinen umfasst die Energiewende die Ziele und Masnahmen des Energiekonzepts der Bundesregierung vom September 2010 (BMWi und BMU 2010) sowie die erganzenden Beschlusse von Regierung, Bundestag und Bundesrat vom Sommer 2011. Letztere wurden durch die Atomkatastrophe in Japan im Marz 2011 gepragt. Bereits kurz darauf wurden acht deutsche Kernkraftwerke endgultig vom Netz genommen. Die ubrigen sollen bis Ende 2022 vom Netz gehen (BMWi 2012).

Subsidies for Learning in Renewable Energy Technologies Under Market Power and Emission Trading

Under perfect competition on the output market, first best technology subsidies in the presence of learning by doing are justified by knowledge spill overs that are not accounted for by individual companies. First best output subsidies are thus depending directly on the learning effects and are, if applicable, positive. Considering electricity markets, a setting of imperfect competition is more appropriate. We show that the second best output subsidy for learning by doing in renewable energies takes the market distortion due to imperfect competition into account and is of ambiguous sign. Based on simulations with a European electricity market model, we find that second best renewable energy subsidies are positive and only insignificantly impacted by market power. By contrast, the welfare gains from an optimal subsidy are considerably higher compared to a hypothetical situation of perfect competition.