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Locational pricing – how can it engage consumers

Parts of the existing electricity usage and most of the additional demand from electro-mobility, heat-pumps with thermal storage and electrification of industrial processes offer opportunities for time-shifting. In a system with rapidly increasing shares of wind- and solar power this flexible demand will be highly valuable to balance the energy system. Given that the power generation capacity is...

Webinar "Congestion Management with Locational Marginal Pricing – First-Hand Experience from North America"

The results of the Bidding Zone Review have reignited the debate around congestion management in Europe. Much of the discussions focus on the number of bidding zones necessary to limit congestion and the challenges for liquidity and competition in smaller zones. Locational marginal pricing would offer an alternative that combines effective congestion management with enhanced liquidity,...

Workshop: Local Marketplaces – Market Design Options

The bidding zone review showed large pricing zones are inadequate for effective congestion management in countries with larger shares of wind- and solar power. Large pricing zones provide the wrong incentives and could result in demand side flexibility escalating rather than supporting the management of grid congestion. However, ENTSO-e also emphasized in the report the risk for liquidity and...

Workshop: Bedarf es einer Strommarktreform?

Webinar: Hedging Locational Price Risk under LMP – Experiences from North America

With a potential transition to locational marginal pricing (LMP) in Europe—as an alternative to bidding zone splits—two key questions arise. First, instead of paying for redispatch in large zones, market operators will obtain congestion revenue from LMP pricing. How can these revenues be used to address distributional concerns from the introduction of LMP? Second, how can market participants hedge...

Reforms for reliably affordable and resilient power markets Understanding and addressing priorities of European countries

Studies have identified the benefits of locational marginal pricing of electricity for consumers. The full remuneration of energy balancing, congestion management, and system services through one market price unlocks demand side flexibility. This can reduce the need for additional generation capacity and grid expansion and save system costs. Furthermore, decentralized decision making based on...

Project-Based Carbon Contracts: A Way to Finance Innovative Low-Carbon Investments

Low and uncertain carbon prices are often stated as a major obstacle for industrial sector investments in technologies to deliver deep emissions reductions. Project-based carbon contracts underwritten by national governments could addressregulatory risk, lower financing costs and strengthen incentives for emission reductions at investment and operation stage. In this paper design options for project-based ...

Insurance, Redistribution, and the Inequality of Lifetime Income

In this paper, we study how the tax-and-transfer system reduces the inequality of lifetime income by redistributing lifetime earnings between individuals with different skill endowments and by providing individuals with insurance against lifetime earnings risk. Based on a dynamic life-cycle model, we find that redistribution through the tax-and-transfer system offsets around half of the inequality ...

Broadband and Productivity: Structural Estimates for Germany

We study the impact of broadband availability on firms’ total factor productivity (TFP) using German firm-level data between 2010 and 2015. We adopt a control function approach to causally identify and separately estimate productivity for 46 two-digit manufacturing and service sectors. Over the sample period, broadband availability, measured by 16 Mbps transmission rates, more than doubled in German ...

The EU Sustainable Finance Taxonomy and Its Contribution to Climate Neutrality

The EU Taxonomy is the first standardised and comprehensive classification system for sustainable economic activities. It covers activities responsible for up to 80% of EU greenhouse gas emissions and may play an important role in channelling investments into low-carbon technologies by helping investors to make informed decisions. However, especially in transition sectors much depends on the stringency ...