Topic Energy Economics

An Advanced Reliability Reserve Incentivizes Flexibility Investments while Safeguarding the Electricity Market

To ensure security of supply in the power sector, many countries are already using or discussing the introduction of capacity mechanisms. Two main types of such mechanisms include capacity markets and capacity reserves. Simultaneously, the expansion of variable renewable energy sources increases the need for power sector flexibility, for which there are promising yet often under-utilized options on ...

Solar Prosumage Under Different Pricing Regimes: Interactions with the Transmission Grid

Residential electricity consumers equipped with photovoltaic (PV) systems and battery storage, also referred to as solar prosumers, are transforming electricity markets. While previous research has dealt with various aspects of solar prosumage, dedicated analyses of their interactions with the transmission grid under varying tariff designs are sparse. We explore the influence of different pricing regimes ...

Flexible Nuclear Power and Fluctuating Renewables? An Analysis for Decarbonized Multi-Vector Energy Systems

Many governments consider new nuclear power plants to promote decarbonization. On the one hand, dispatchable nuclear plants can complement fluctuating generation from wind and PV. On the other hand, escalating construction costs and times raise economic concerns. This paper investigates the economic threshold at which nuclear plants are an efficient decarbonization option. Building on an extensive ...

Mitigation versus Competitiveness? Industry Compensation in the European Union Emissions Trading System

Carbon pricing policies are usually combined with compensation for exposed firms to prevent adverse competitiveness effects. In cap-and-trade systems, this carbon cost compensation mostly occurs through free allocation of emission permits. Using an administrative panel of German manufacturing firms, this paper investigates how free allocation in the European Union Emissions Trading System affects firms’ ...

Contracting Matters: Hedging Producers and Consumers with a Renewable Energy Pool

Renewable energy installations are rapidly gaining market share due to falling technology costs and supportive policies. Meanwhile, the energy price crisis in 2022 shifted the energy policy debate toward the question of how consumers can better benefit from the low and stable generation costs of renewable electricity. Long-term contracts for renewable energy to link producers and consumers are an option ...

Industrial Decarbonisation in a Fragmented World:: An Effective Carbon Price with a ‘Climate Contribution’

Context and problem • The European Union’s Carbon Border Adjustment Mechanism (CBAM) was introduced to prevent carbon leakage, and to incentivise global carbon pricing. The UK is set to introduce a CBAM in 2027 for the same reasons. However, this policy measure will face limitations in a fragmented geopolitical environment if progress on global carbon pricing remains slow. • The reliance on international ...

Understanding Energy Savings in a Crisis: The Role of Prices and Non-monetary Factors

Russia’s invasion of Ukraine in 2022 was accompanied by a significant reduction of its gas supply to Europe, causing sharp energy price surges and prompting governments to respond with public appeals and programs aimed at reducing consumption. This paper investigates the effects of price increases and non-monetary factors, such as public appeals and saving programs, on residential energy savings during ...

Locked in a Fossil-Centric System Paradigm: LNG Expansion Impedes Socio-Ecological Transition Toward a Just and Renewable Energy Future

The expansion of liquefied natural gas (LNG) infrastructure in Europe significantly impedes the necessary socio-ecological transformation (SET) required to shift toward a decentralized, 100% renewable energy system (RES). By reinforcing a fossil-centric system paradigm, LNG infrastructure deepens Europe’s dependence on fossil fuels, thereby delaying climate goals and increasing greenhouse gas emissions. ...

Der stille Greentech-Boom, der Deutschlands WIrtschaft vorantreibt

On Strategic Behavior in Electricity Markets during the 2022 Energy Crisis: An Ex-post Analysis for the German Power Sector

During the 2022 energy crisis, electricity prices across Europe have risen to unprecedented heights. In a case study for Germany, this work investigates to which extent price spikes can be attributed to changes in upstream commodity prices, and to which degree strategic behavior by generators may have contributed to the situation. Electricity markets are more prone to the effects of such behavior if ...