nonparametric measures of scale and technical change for competitive firms under uncertainty measures of scale elasticity and rate of technical change can be obtained nonparametrically in the sandmo model of competitive firms with nonlinear risk preference responding to output price risk information on risk attitudes is not needed for measurement of scale elasticity because it is observable as the ratio of average to marginal cost as in certainty models the cross section of panel data sets can be used to develop a nonparametric marginal cost measure which permits identification of scale elasticity the technical change measure then follows from the scale measure and the time series portion of the panel data set

financing renewable energy infrastructure formulation pricing and impact of a carbon revenue bond abstract renewable energy systems depend on large financial incentives to compete with conventional generation methods market based incentives including state level rec markets and international carbon markets have been proposed as solutions to increase renewable energy investment in this paper we introduce and formulate a carbon revenue bond a financing tool to complement environmental credit markets to encourage renewable energy investment to illustrate its use we value the bond by predicting future revenue using stochastic processes after analyzing historical price data three illustrative examples are presented for renewable energy development in three different markets europe australia and new jersey our findings reveal that the sale of a carbon revenue bond with a ten year maturity can finance a significant portion of a project s initial cost

when do firms generate evidence on in house electricity supply in africa this paper attempts to identify the underlying causes and costs of own generation of electric power in africa rigorous empirical analysis of 8483 currently operating firms in 25 african countries shows that the prevalence of own generation would remain high at around 20 even if power supplies were perfectly reliable suggesting that other factors such as firms size emergency back up and export regulations play a critical role in the decision to own a generator the costs of own generation are about three times as high as the price of purchasing subsidized electricity from the public grid however because these generators only operate a small fraction of the time they do not greatly affect the overall average cost of power to industry the benefits of generator ownership are also substantial firms with their own generators report a value of lost load of less than us 50 per hour compared with more than us 150 per hour for those without nevertheless when costs and benefits are considered side by side the balance is not found to be significantly positive

environmental efficiency of investments in renewable energy comparative analysis at macroeconomic level abstract this paper aims to bring into attention the concept of renewable energy investments efficiency and to study one of the three concepts related to it namely environmental efficiency of investments in renewable energy the analysis is undertaken at macroeconomic level for several countries in europe some of them are member states of european union and were observed over the period between 1990 and 2008 the method assumes the study of the econometric models based on kaya identity an equation widely used in studies regarding emissions trends and future emissions scenarios working with time series and cross sectional data a panel data approach is needed indicators like energy intensity co 2 intensity and gross domestic product per capita and per unit of investment are used as they establish a connection between effects and efforts a prerequisite for studying the efficiency a novelty of this research lies in the calculation of environmental efficiency index after an original method proposed by authors the findings of this analysis reveal that there are both countries with high and low environmental efficiency of investments in renewable energy

back to the future rethinking auctions for renewable electricity support abstract the effectiveness and cost effectiveness of two main types of instruments feed in tariffs and quotas with tradable green certificates have usually been compared in the literature on renewable electricity promotion due to negative past experiences with a third instrument auctions this instrument has been broadly dismissed in academics and until recently also in policy practice however and based on an in depth review of experiences with auction schemes for renewable electricity around the world this paper argues that some of the problems with auctions in the past can be mitigated with the appropriate design elements and that indeed auctions can play an important role in the future implementation of renewable electricity support instruments around the world the paper provides a proposal for the coherent integration of several design elements

replacement of agricultural price supports by area payments in the european union and the effects on pesticide use this article determines the contribution of recent european union agricultural policy reforms on the use of pesticides our theoretical model extends the multioutput generalization of the lichtenberg zilberman damage control technology model developed by chambers and lichtenberg our empirical analysis uses farm level data for a sample of french farms results suggest that price effects on the use of pesticides are always more elastic than area payment effects this indicates that policy reforms consisting of a reduction in price supports in favor of area payments may reduce application of crop protection inputs such policy changes which represent a certain degree of decoupling took place under the 1992 common agricultural policy reforms

rent and rent seeking in renewable energy support policies feed in tariff vs renewable portfolio standard abstract two popular policies for fostering electricity from renewable energy sources res e are fit feed in tariffs and rps renewable portfolio standards although it is essential for the government to intervene in the renewable energy market for a positive externality of res e poorly designed market regulations can lead to excess profits for the renewable energy sector which in turn increases policy costs in addition those who benefit from such regulations may actively seek rents this paper explores the rents or windfall profits generated through rps and fit and furthermore investigates which is more substantial for the case of south korea which has had experience with fit and rps over the past 10 years according to the results rents generated from rps were bigger than those from fit except for solar pv in south korea moreover this study also investigates the policy design elements that could curb these rents

resource allocation in a general equilibrium model of production under uncertainty the case of variable supply of labor abstract this paper examines the effects of a marginal change in uncertainty on resource allocation and factor rewards by relaxing the assumption of factor inelasticity we demonstrate that integrating a variable labor supply into batra s two sector uncertainty model can mitigate or reverse many of the earlier results specifically a marginal increase in uncertainty may trigger the resource to move from the certainty sector to the uncertainty sector in the presence of a backward bending labor supply curve

fossil fuel subsidy removal and inadequate public power supply implications for businesses abstract we briefly consider the impact of fossil fuel subsidy removal policies in the context of inadequate power supply with a focus on the implications for businesses in doing so we utilize the case of the early 2012 fuel subsidy removal in nigeria the rationale for such subsidy removal policies is typically informed by analysis showing that they lead to an economically inefficient allocation of resources and market distortions while often failing to meet intended objectives however often the realities of infrastructural and institutional deficiencies are not appropriately factored into the decision making process businesses in many developing countries already impaired by the high cost of power supply deficiencies become even less competitive on an unsubsidized basis we find that justifications for removal often do not adequately reflect the specific environments of developing country economies resulting in poor recommendations or ineffective policy

long run industry equilibrium with uncertainty abstract in this paper we consider the effects of uncertainty on industry equilibrium when firms must commit themselves to production before prices are revealed we show that a an increase in demand uncertainty will i not affect the equilibrium number and size of firms if they are risk neutral ii reduce the equilibrium number of firms if they are risk averse but will have an ambiguous effect on their size b in equilibrium firms operate at capacity if they are risk neutral but at excess capacity if they are risk averse

the development of renewable energy power in india which policies have been effective abstract the international energy agency has identified the development of renewable energy sources as a key element to mitigate climate change at the same time it has projected india to be the second largest contributor to the increase in global energy demand to 2035 india hence faces a significant challenge to ensure its energy security by diversifying its power generation mix in the wake of the creation of a green climate fund in cancun this paper studies empirically the effect of the introduction of the electricity act 2003 and the tariff policy 2006 as well as the implementation of feed in tariffs and minimum quotas on clean electricity sourcing on the development of grid connected renewable energy power in nine indian states over the period 2001 2009 results suggest that the passing of the tariff policy 2006 state level policies quantity based instruments and a greater participation of the private sector have played a key role in promoting the development of installed capacity from renewable energy power in the nine states of the sample

a firm level analysis of outage loss differentials and self generation evidence from african business enterprises abstract this study examines the outage loss differential between firms that engage in backup generation and those that do not unmitigated outage losses were estimated to be us 2 01 23 92 per kwh for firms engaging in self generation and range from us 1 54 to 32 46 per kwh for firms without self generation we also find that firms engaging in self generation would have suffered additional 1 183 outage losses had they not invested in self generation on the other hand firms without self generation would have reduced their outage losses by around 6 46 if they had engaged in self generation further analyses however reveal that although engagement in self generation reduced outage losses a firm engaging in self generation may still suffer a greater unmitigated outage loss relative to a firm without a backup generator the relative outage losses depend on the relative vulnerability of the operations of the two sets of firms to power interruption and the relative generating capacity of a self generating firm to its own required electricity loads policy reforms that allow firms whose operations are highly vulnerable to outages to make a binding contract with utilities in order to get preferential supply are recommended

de risking concentrated solar power in emerging markets the role of policies and international finance institutions abstract concentrated solar power csp is a promising technology for low carbon energy systems as combined with thermal storage it can store solar energy as heat and deliver power more flexibly and when most needed by the grid however its high cost prevents its rapid deployment and affects its affordability in emerging economies international financial institutions ifis have emerged as key players to enable csp in emerging economies especially when cooperating with national policymakers through the analysis of two csp plants in india and morocco where ifis provided the lion s share of finance this paper aims to assess the effectiveness of their support and estimate the impact of ifis financing on electricity production costs and mobilization of private investments the two case studies show that public financial institutions can play a leading role in reducing the cost of csp support on public budgets by providing concessional loans in countries where public and or private finance would be too expensive or extending maturities where commercial investors are present but poorly suited for project finance finally we show that combined with competitive tariff setting mechanism tenders and auctions public financial support can also be a cost effective tool to engage private investors in csp

lechatelier effects for the competitive firm under price uncertainty lechatelier effects confirm the intuition that constrained decisions are not only suboptimal but also restrained in the sense of being less elastic samuelson 1947 introduced this idea into economics and showed that it blends neatly with economic models of decision making under certainty being particularly well suited to the competitive firm as emphasized by silberberg 1971 linearity of the objective function combines with convexity in the constraint imposed by the production technology to yield envelope results at the first order and lechatelier effects at the second as powerful consequences of the maximization hypothesis the envelope results of primary interest in producer theory shephard s lemma for cost functions and hotelling s lemma for profit functions are equality relations reflecting the firstorder stationarity of an optimum lechatelier effects in contrast are inequality relations reflecting the restrained nature of short run responses compared with long run less constrained responses thus the quantities of labor demanded and output supplied are more elastic with respect to wage rate and output price changes in the long run than in the short run these lechatelier predictions pertain to a firm that has fully adjusted to an exogenous set of factor and output prices and thus apply only in the neighborhood of a long run equilibrium configuration for the firm however they apply equally well whether capital and labor are substitute or complementary factors of production milgrom and roberts 1996 have established a global lechatelier principle under the assumption that capital and labor are always substitutes or always complements in production a stipulation that is necessarily true for the infinitesimal changes contemplated in the local lechatelier predictions when the firm makes decisions while facing uncertainty about output price risk preferences influence behavior if the uncertainty cannot be fully diversified through futures contracts or the sale of ownership shares as in the case of closely held family businesses such as some of those

the cost of electric power interruptions in the industrial sector estimates derived from interruptible service programs the electric power industry has become increasingly interested in the value customers place upon service reliability with the demand for reliability couched in terms of outage or shortage costs the survey based method of eliciting these costs dominates the literature this paper explores and demonstrates a method for estimating outage and shortage costs based upon behavioral data a discrete choice model is developed for estimating shortage costs using observed decisions of industrial customers regarding participation in interruptible service programs the resulting shortage cost estimates of 4 per kwh unserved for a one hour interruption are consistent with previous survey based estimates

renewable energy and policy options in an integrated asean electricity market quantitative assessments and policy implications abstract energy market integration emi in the asean region is a promising solution to relieve the current immobilization of its renewable energy resources and would serve the fast increasing demand for electricity in the region emi could be further extended with coordinated policies in carbon pricing renewable energy portfolio standards rps and feed in tariffs fit in the asean countries using a linear dynamic programming model this study quantitatively assesses the impacts of emi and the above mentioned policies on the development of renewable energy in the power generation sector of the region and the carbon emissions reduction achievable with these policies according to our results emi is expected to significantly promote the adoption of renewable energy along with emi fit appears to be more cost effective than rps and is recommended for the asean region albeit political barriers for policy coordination among the countries might be a practical concern in addition an rps of 30 electricity from renewable sources by 2030 which is considered politically a low hanging fruit would achieve moderate improvements in carbon emissions reductions and renewable energy development while incurring negligible increases in the total cost of electricity

coping with poor public capital abstract despite recent successes in stabilization and structural reforms in many developing countries the private investment response to date has been mixed even among the strongest reformers this disappointing result can be partly explained by the continued poor provision of public capital and services we test this hypothesis using unique firm level data on investment and provision of public infrastructure services the results suggest that poor complementary public capital significantly reduces private investment however firms can substitute for deficient public services by investing in complementary capital themselves but this comes at a cost less productive capital will be installed

review of renewable energy investment and financing in china status mode issues and countermeasures abstract with the support of national policies china s renewable energy generation industry has experienced a rapid development period and entered the world forefront level especially in the aspects of installed capacity and speed of newly installed capacity however with the rapid development of renewable energy the power generation industry is facing more and more challenges particularly in investment and financing as for wind power industry there are also some problems such as single financing channels blindness of projects investment and so on which will result in financing difficulties for some advanced projects in addition the problems for the investment of photovoltaic pv power generation leads to vicious competition and a tumble in international market thus the overcapacity of china s entire pv industry emerges generally speaking the renewable energy industry is facing a seemingly contradictory predicament of funding deficiencies and blind investment which is derived from the government centered renewable energy investment and financing this government centered mode has promoted the development of renewable energy industry in the early stage but it cannot be adapted to the requirements of sustainable development in view of these the problems of renewable energy investment and financing are deeply studied in this paper this paper proceeds as follows firstly the overview of the development of china s renewable energy industry is briefly introduced secondly the status quo of china s renewable energy investment and financing is explored in detail based on overview of the following five perspectives investment situation investment and financing bodies investment and financing means sources of funding and financing channels secondly the patterns and characteristics of renewable energy financing are summarized and a comparative analysis of wind power and photovoltaic power generation financing means is carried out finally renewable energy investment and financing issues are discussed and further feasible proposals are put forward in all this paper is of great significance in the sustainable and healthy development of china s renewable energy

design of an economically efficient feed in tariff structure for renewable energy development abstract evidence suggests albeit tentatively that feed in tariffs fits are more effective than alternative support schemes in promoting renewable energy technologies rets fits provide long term financial stability for investors in rets which at the prevailing market price of electricity are not currently cost efficient enough to compete with traditional fossil fuel technologies on the other hand if not properly designed fits can be economically inefficient as is widely regarded to have been the case under the public utility regulatory policies act of 1978 purpa under purpa too high a guaranteed price led to the creation of so called purpa machines poorly performing generating units that could survive financially only because of heavy subsidies that came at the expense of retail customers similarly because of their adverse impacts on retail electricity rates german fits have been subject to increasing political pressure from utilities and customers in this paper we propose an innovative two part fit consisting of both a capacity payment and a market based energy payment which can be used to meet the renewables policy goals of regulators our two part tariff design draws on the strengths of traditional fits relies on market mechanisms is easy to implement and avoids the problems caused by distorting wholesale energy markets through above market energy payments the approach is modeled on forward capacity market designs that have been recently implemented by several regional transmission organizations in the usa to address needs for new generating capacity to ensure system reliability

competitive industry equilibrium under uncertainty and free entry this paper investigates the properties of industry equilibrium under price uncertainty given free entry and exit for any form of risk averse behavior it is shown that an increase in demand uncertainty as measured by a mean preserving spread increases mean output price and reduces output of firms in long run equilibrium

economic guideline about financial utilization of flat plate solar collectors fpscs for the consumer segment in the city of eskisehir abstract solar energy systems yield energy savings relative to conventional systems by considering the ecological balance although it still has barriers the most commonly used system of this type is fpsc in turkey which produces hot water by absorbing solar energy through fpscs this study is a kind of guidance about utilization of fpscs in eskisehir that concentrates on a consumer segment the aim of the study is displaying the necessity of transition to renewable energy systems in the local free markets where the place of domestic resources the data is supplied from an original hand collected survey and turkish governmental institutions such as the central bank of the republic of turkey cbrt and the turkish statistical institute turkstat that is used for a possible scenario to show how these systems can become an extensive investment and financed in the city the most significant finding is purchasing a fpsc device which is a rational and profitable investment decision for households in the economic conditions of eskisehir this type of energy system has certain costs including installation credit and annual maintenance costs however after they have been set up fpsc systems yield many ecological advantages that more than offset the associated costs such as fuel savings over the long term and exemptions from tax payments that apply to other types of fuels these advantages benefit both the environment on a global scale and the region in which the system is constructed therefore the global and local economy can improve its structure by utilizing fpscs

does the law of supply hold under uncertainty a widely held conjecture of economists is that the quantity supplied by pricetaking producers increases with an increase in output price law of supply this cornerstone of economics has been proven repeatedly with many techniques under many different sets of assumptions and is found in all textbooks on principles of economics most of these proofs assume full certainty of production relationships single product technology and or risk neutrality in a world of uncertainty one of the most crucial aspects of economic behaviour is risk aversion with risk aversion diversification is a basic response to economic uncertainty thus models of producer behaviour under uncertainty need to consider multioutput technology where diversification is a possibility this paper points out that the widely held law of supply may fail when these generalities risky multioutput production with risk aversion are introduced simultaneously where diversification is also affected by a capacity constraint in production conditions are developed under which the law fails holds the peculiar result occurs because increasing price can increase profit risk more than proportionally while expected profit increases proportionally this relative increase in risk causes a tendency to shift production capacity into an alternative activity the first section introduces a model of production under uncertainty the second section analyses the behaviour of supply in the special case of additive production risk without price risk the third section shows that similar problems can be encountered with other cases as well empirical examples which demonstrate relevance of the results are also given

risk aversion and yield uncertainty in duality models of production a mean variance approach a duality model of production is developed that endogenizes stochastic output decisions under risk aversion the model incorporates both yield and price uncertainty and nonlinear mean variance risk preferences this permits modeling of the firm s expected output supply and input demand decisions under risk and also in principle the firm s output variance decisions the duality model is tractable for empirical research

take or pay contracts for renewables deployment abstract renewables require support policies to deliver the european 20 target we discuss the requirements for least cost development and efficient operation and quantify how different schemes i allow for the development of a renewable energy technology portfolio ii reduce rent transfers to infra marginal technologies or better than marginal resource bases and iii minimise regulatory risk and thus capital costs for new projects long term take or pay contracts minimise regulatory uncertainty create appropriate incentives for location and operation allow for efficient system operation and seem compatible with european state aid we discuss how property rights legislation protects existing renewables investors and thus can ensure ongoing investment during a transition towards the new scheme

public policy influence on renewable energy investments a panel data study across oecd countries this paper examines the impact of public policy measures on renewable energy re investments in electricity generating capacity made by institutional investors using a novel combination of datasets and a longitudinal research design we investigate the influence of different policy measures in a sample of oecd countries to suggest an effective policy mix which could tackle failures in the market for clean energy the results call for technology specific policies which take into account actual market conditions and technology maturity to improve the conditions for institutional investments advisable policy instruments include economic and fiscal incentives such as feed in tariffs fit especially for less mature technologies additionally market based instruments such as greenhouse gas ghg emission trading systems for mature technologies should be included these policy measures directly impact the risk and return structure of re projects supplementing these with regulatory measures such as codes and standards e g rps and long term strategic planning could further strengthen the context for re investments

the lechatelier principle under production uncertainty under production uncertainty it is shown that the lechatelier principle holds for the derived demand of the ith factor if it is technically complementary competing with the riskincreasing risk reducing quasi fixed input and absolute risk aversion is decreasing in addition the lechatelier principle for the output supply function holds if the quasi fixed factor is an inferior normal and risk increasing risk reducing input and partial risk aversion is increasing

the potentials of a reverse auction in allocating subsidies for cost effective roof top photovoltaic system deployment abstract photovoltaic pv has developed to one of the most promising technologies for renewable electricity generation the austrian government currently provides subsidies for roof top pv systems through a constant administratively determined feed in tariff or an investment co funding in both subsidy schemes applications are approved on a first come first served basis there are concerns about i the selection of suitable roofs for pv systems and ii allocating subsidies among applicants to deploy roof top pv systems cost effectively thus we analyze the potentials of a simple discriminative first price reverse auction application scheme applicants define individually the required level of subsidy and those with the lowest request for subsidies are selected in an ex post analysis we evaluate the potentials of such a scheme in increasing power output and saving public spending for the federal state of vorarlberg in austria results indicate a potential increase of cumulated produced electricity between 15 and 18 in comparison to the current policy in addition a reverse auction based system would lead to savings of public spending per kwh between 20 and 41

the main support mechanisms to finance renewable energy development considering that the major part of greenhouse gases is carbon dioxide there is a global concern aimed at reducing carbon emissions additionally major consumer countries are looking for alternati

economic consequence analysis of electric power infrastructure disruptions general equilibrium approaches abstract we develop a stylized two sector analytical general equilibrium model that elucidates mechanisms of adjustment to widespread long duration electric power disruptions algebraic solutions illustrate the relative importance of resilience through producer and consumer input substitutability and mitigation investment in backup infrastructure capacity in moderating the economy wide costs of outages simulations of the impacts of a two week power outage on california s bay area economy using both the analytical model and a computational general equilibrium model yield welfare losses that are substantially smaller than stated preference estimates of willingness to pay results highlight the role of resilience in moderating consequences of energy supply shocks

constant returns to scale and competitive equilibrium under uncertainty abstract this paper considers the implications of the assumption of constant returns to scale in expected utility maximizing models of the competitive firm or industry in which markets for risk are absent under widely used assumptions about risk preferences it is shown that with constant returns to scale average profits are more than necessary to cover the implicit costs of risk bearing when the free entry of identical firms is possible this assumption about technology is shown to be incompatible with the assumption that entrepreneurs are risk averse

economic and environmental effectiveness of renewable energy policy instruments best practices from india abstract renewable energy re has been identified as a key tool to counter climate change and enhance energy security countries across the globe have been promoting this sector by several policy measures however limited research has been undertaken on the economic and environmental efficacy of re policy instruments especially in context of emerging economies like india which have witnessed substantial capacity addition and have set ambitious targets to de carbonize their economy this paper identifies 25 innovative practices followed in india which have enabled accelerated re capacity addition with minimal financial obligations these include energy entrepreneurship energy democratization private sector participation hedging and apportioning re procurement use of auctions with stringent participatory norms creditworthy counter party leverage of risk capital by developmental institutions regular revision of tariffs environmental cess on polluting industries long term re purchase trajectory and incentivizing green power output results indicate high financial impact of instruments support of us 3 5 mw h over applicable tariff which gets neutralized when tax inflow is considered lower carbon abatement cost us 3 6 tco2eq depicts high environmental efficacy the paper shares best practices from india in terms of efficient use of re policy enablers which may be contextualized in other emerging economies as per the local requirements