Topic Energy Economics

Bridges over Troubled Waters: Climate Clubs, Alliances, and Partnerships as Safeguards for Effective International Cooperation?

From Negative to Positive Carbon Pricing in Mexico

Over the course of a decade, Mexico transitioned from a peak of 1.8% of GDP given as fuel subsidies in 2008 to generating positive fuel tax revenues equivalent to 1.6% of its GDP in 2018. This paper analyzes Mexico's carbon pricing experience: the mechanisms that made fossil fuel subsidies such a large burden on public finances, the strategies followed in its five-year phase-out, and the institutional ...

Ampel-Monitor Energiewende #2: The State of Affairs on August 24, 2022

Contracts for Difference Support the Expansion of Renewable Energy Sources while Reducing Electricity Price Risks

The German Federal Government passed the “Easter Package” in July 2022, which envisages a number of measures for the expansion of renewable energy sources. The package retains sliding market premiums as a remuneration mechanism, which protect electricity producers unilaterally, while contracts for difference (CfDs), which also protect electricity customers, are only used in the offshore wind sector. ...

Bidirectional Coupling of a Long-term Integrated Assessment Model with an Hourly Power Sector Model

Integrated assessment models (IAMs) are the central tool for the quantitative analysis of climate change mitigation strategies. However, due to their global, cross-sectoral and centennial scope, IAMs cannot explicitly represent the temporal and spatial detail required to properly analyze the key role of variable renewable electricity (VRE) for decarbonizing the power sector and enabling emission reductions ...

Financing Renewables in the Age of Falling Technology Costs

Cost of renewable energies have dropped, approaching wholesale power price levels. As a result, the role of renewable energy policy design is shifting – from covering incremental costs towards facilitating risk-hedging. An analytical model of the financing structure of renewable investment projects is developed to assess this effect und used to compare different policy design choices: contracts for ...

Knappes Gas – Optionen zur Verringerung der Deckungslücke in Deutschland

In this article, we provide the results of a simple quantitative analysis of the potential remedies to reduce the supply gap in Germany that arises if Russia stops delivering natural gas. We take into account the supply potential of other suppliers, and combine this with an analysis of the additional supply potential by stopping electricity generation from natural gas. Moreover, we investigate the ...

Too Good to Be True? Time-inconsistent Renewable Energy Policies

The transition to low-carbon economies requires massive investments into renewable energies, which are commonly supported through regulatory frameworks. Yet, governments can have incentives – and the ability – to deviate from previously announced support policies once those investments have been made, which can deter investments. We analyze a renewable energy dynamic regulation game and derive under ...

Power Sector Effects of Alternative Production and Storage Options for Green Hydrogen

The use of green hydrogen can support the decarbonization of sectors which are difficult to electrify, such as industry or heavy transport. Yet, the wider power sector effects of providing green hydrogen are not well understood so far. We use an open-source electricity sector model to investigate potential power sector interactions of three alternative supply chains for green hydrogen in Germany in ...

Accounting for Spatiality of Renewables and Storage in Transmission Planning

The current governance process to plan the German energy system omits two options to substitute grid expansion: First, placing renewables closer to demand instead of where site conditions are best. Second, utilizing storage instead of additional transmission infrastructure to prevent grid congestion. In the paper, we apply a comprehensive capacity expansion model based on the AnyMOD modeling framework ...