Following the vote in the European Parliament, the Commission will not be able to quickly implement “backloading”, the point of which is to send a very short-term signal to the market pending further structural reforms. There still remains the question of what actions can be taken to revitalize the CO2 allowances trading system. Continue reading »
The PJM market has always been, and continues to be, a source of fascination to anyone interested in organized or competitive wholesale electricity markets. First, it is by far the largest such organized market operating in North America, among the largest anywhere in the world, with 182 GW of installed capacity and a large geographical footprint. Second, PJM was among the first to introduce a number of features, such as locational marginal pricing (LMP), now common place in other markets. Third, PJM has introduced and successfully operates a number of markets, including capacity markets, that are extensively studies by other market operators who believe such a feature may be an improvement to their own.
Since the Copenhagen conference of December 2009, the actors involved in climate negotiations seem be engaged in a game of mistigri, in which everyone is in a hurry to pass on any card that exposes them to the slightest commitment. The overall result is that deadlines are being pushed back, and the prospect of an international agreement coming into force from 2020 now seems optimistic in the extreme. The economic crisis has accentuated this turning away from the climate issue, or at least its decline in policy makers’ scale of priorities. A curious semantic shift has accompanied this phenomenon: there is much less talk of global warming, while the media have turned their attention to the concept of energy transition. This shift is not innocuous, and may lead, if this novel concept is not defined more rigorously, to a justification of our collective resignation in the face of climate risk.
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The residential increasing block pricing structure: an efficient solution to control energy demand and tackle inequalitiesMarch 31st, 2013 by Thierry Badouard, Université Pierre Mendès-France
Increasing block tariffs structure -also called, progressive tariffs, tiered-rates or inverted block rates- is a pricing model that charges a higher rate per kWh at higher levels of energy usage, and a lower rate at lower usage levels. The model is built around the first block -also called “baseline” or “lifeline”- that corresponds to household essential needs. Each successive block has a higher price per kWh such that the more clients consume, the higher the average price. Such pricing design encourages consumers to save energy thanks to an appropriate price signal, which is even stronger where clients are not charged of basic tariff. As opposed to the current system, in which the combination of basic tariff and a uniform rate makes marginal unit cheaper and cheaper, the introduction of IBT send a price-signal which leads to energy savings. Although, the pricing model is straightforward and easy to understand by households, it is still underdeveloped in Europe while it is already used by more than 90 countries around the world. Continue reading »
The European Commission’s proposal is supposed to deliver more cross-border electricity transmission.It is an extension of the current system of national-welfare centred regulations, a system which does not target the optimisation of the EU electricity network, and as such is inconsistent with a truly single market. However, the integrated first-best solution – a single European system operator, regulated by a single regulator, which develops the network in coordination with generators and consumers – appears politically infeasible. To overcome this, we propose a bold blueprint for a European system to fund and incentivise infrastructure development. The approach is fourfold: (1) implement vertical unbundling; (2) add a European system-management layer; (3) establish a stringent planning process; and (4) phase-in European cost-sharing.
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Cost Benefit Analysis has proven to be a useful tool to support the economic appraisal of important projects in many sectors. Recently, a single Cost Benefit Analysis method has been proposed at EU level to evaluate and compare electricity transmission and storage projects from different countries, which is unprecedented anywhere in the world. Continue reading »
The EU ETS is the main instrument of European climate policy, and many policymakers envisage it as a driving force of the EU’s transition to a low-carbon economy. By putting a price on emissions, the scheme is expected to encourage heavy polluters to develop new low-carbon technologies. At first glance it is encouraging to notice, then, that patenting for low-carbon technologies has surged in Europe since 2005. When analyzing new data we find compelling evidence that the EU ETS has indeed encouraged regulated companies to develop new low-carbon technologies, but this effect is concentrated among too few companies to account for the surge in low-carbon patenting.
The Energy Policy Act of 2005 requires FERC to publish an annual account of advancements in smart metering and demand response programs in the US, the latest of which was published in Dec 2012. It is a comprehensive survey of 3,349 “entities,” all but a handful considered “utilities” of one form, shape, or size. Over 1,900, roughly 60%, responded – not bad as survey participation rates go. The sheer number of active entities in this space is simply mind-boggling and may explain why it is difficult to get things done, whether it is demand response or anything else.
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Since the first wave of nuclear reactors in 1970 to the on-going construction of Generation III+ reactors in Finland and France, nuclear power seems to be doomed to a cost escalation curse. If the curse is not stopped, nuclear power competitiveness will be compromised. On the one hand, construction expenses represent about 60% on the total cost of generation of this technology and on the other hand alternative sources of energy have experienced important decreases in their fixed costs. If the trends go on, nuclear power will become more expensive while competing technologies will become cheaper.
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Progressive energy tariffs in France: an inefficient and unfair response to fuel poverty and energy efficiency goalsDecember 19th, 2012 by François Lévêque, Ecole des mines de Paris
The French Lower House passed a law last October introducing progressive tariffs for all energies distributed through a network: natural gas, electricity and heat. Though it was rejected by the Senate, the government is still supporting it. Introducing progressive tariffs for energy was one of the 60 promises of French President Hollande during his campaign. The law aims at reducing residential energy consumption and fighting fuel poverty. But the system proposed by the Lower House is extremely unlikely to reach these two goals. Continue reading »