short term optimal wind power generation capacity in liberalized electricity markets mainly because of environmental concerns and fuel price uncertainties considerable amounts of wind based generation capacity are being added to some deregulated power systems the rapid wind development registered in some countries has essentially been driven by strong subsidizing programs since wind investments are commonly isolated from market signals installed wind capacity can be higher than optimal leading to distortions of the power prices with a consequent loss of social welfare in this work the influence of wind generation on power prices in the framework of a liberalized electricity market has been assessed by means of stochastic simulation techniques the developed methodology allows investigating the maximal wind capacity that would be profitably deployed if wind investments were subject to market conditions only for this purpose stochastic variables determining power prices are accurately modeled a test system resembling the size and characteristics of the german power system has been selected for this study the expected value of the optimal short term wind capacity is evaluated for a considerable number of random realizations of power prices the impact of dispersing the wind capacity over statistical independent wind sites has also been evaluated the simulation results reveal that fuel prices installation and financing costs of wind investments are very influential parameters on the maximal wind capacity that might be accommodated in a market based manner

wind power in the danish liberalised power market policy measures price impact and investor incentives wind power has a strong position at the danish electricity market mainly caused by high feed in tariffs in the 1990s investments in new wind power installations on land however have declined dramatically after the danish electricity market was liberalised in 1999 first the paper describes how policy measures directed towards wind power have been redesigned to match the liberalised market then we estimate the impact of the redesigned tariffs on the electricity prices finally we assess whether the new tariffs make an incentive to invest in wind power the paper concludes that the new tariffs not by itself make evidence for the actual danish recession in new wind power installations after the electricity reform the main causes could include a combination of problems in spatial planning high risk aversion of new wind turbine investors and perhaps more favourable support schemes in other countries

welfare and trade effects of international environmental agreements we analyse the welfare effects of environmental policy arising from the formation of an international environmental agreement on the participating and non participating countries and thus shed light on the potential incentives for a country to join such an agreement within a n country q goods general equilibrium framework under free trade conditions we consider unilateral and cooperative policy settings and within the latter country specific and fully harmonized policies within the agreement a key result of the paper is the emergence of a negative relationship arising from terms of trade effects between the welfare changes of the participating and non participating countries following the formation of the agreement these however do not result in a zero sum welfare outcome for the world as a whole

relative earnings and individual union membership in the united kingdom considerable attention has been focused in recent years on the empirical analysis of the effect of trade unions on the structure of earnings such empirical investigation usually entails measurement of the union non union differential in wages or earnings at the level of the individual this involves comparison of the earnings of union members with estimates of what their earnings would be were they not union members or equivalently examination of differences in earnings between individuals comparable with regard to all other relevant characteristics who differ in their union membership alone in the united kingdom all previous attempts at estimation of this differential have used aggregate data at either the industry or occupation level 1 the conventional methodology involves regression of the logarithm of the average wage on either the proportion of workers who are union members or the proportion covered by a collective agreement together with a vector of industry characteristics that are deemed to determine the non union wage however several problems are immediately apparent with this methodology first the model ignores the possibility of variation in the differential across industries which has potentially serious consequences second the vector of other characteristics customarily used is somewhat limited and raises doubts concerning the adequacy of the standardization for what might loosely be termed labour quality third only a sub sample of industries is ever used owing to lack of data those industries excluded are generally smaller in terms of employment that those included if the differential varies with the size of the industry a further bias will be induced all of these problems are either removed or lessened by the use of individual level data for an analysis of their impact at the industry level see geroski and stewart 1981 2 as a result it is now widely accepted that the appropriate way to measure such differentials is to use micro data sets at the level of the individual worker until recently suitable data have not been available for the united kingdom and hence such analysis was not possible this paper presents the first estimates for the united kingdom based on individual level data if the value of the union non union differential were the same for all workers in the unionized sector analysis at the industry level and the individual level would produce similar results however the marshallian laws of derived demand suggest that this will not be the case despite this clear prediction of variation in the differential there has been little systematic investigation of the variation this paper also presents such an analysis since variation in the differential across industries results in aggregation bias in industry level studies such an analysis is of considerable relevance to the evaluation of the evidence from such studies as well as being of interest in its own right the paper is laid out as follows section i presents a method of estimating the union non union differential at the individual level while section ii

the merit order effect of wind and photovoltaic electricity generation in germany 2008 2016 estimation and distributional implications abstract generation from renewable energy sources in germany has experienced a considerable uptake in recent years mainly responsible for this development is the german renewable energy sources act erneuerbare energien gesetz eeg this paper considers redistributive implications of the eeg for different electricity consumers using time series regression analysis we show that electricity generation by wind and pv has reduced spot market prices considerably by 6 mwh in 2010 rising to 10 mwh in 2012 we use these results to build a near term forecasting tool for merit order effects projected to reach 14 16 mwh in 2016 on the other hand the costs of the eeg are passed forward to consumers in the form of a surcharge our findings highlight significant redistributive transfers under the current design of the eeg in particular some energy intensive industries are benefiting from lower wholesale electricity prices whilst being largely exempted from contributing to the costs of the scheme we also highlight implications of our results for other areas for reform of the eeg such as adequate remuneration mechanisms that ensure efficient operation and investment decisions are made under the scheme more generally these findings suggest that policy makers need to integrate distributional assessments into policy design and implementation

how market design shapes the spatial distribution of power plant curtailment costs abstract when multiple power plants are curtailed at the same time and in the same region electricity system costs rise if transmission lines are congested these costs might be amplified and spatially more concentrated because there are less spatial spill overs we study how such costs and their distribution depend on the market design nodal pricing or uniform pricing we extend the literature on curtailment by considering space and market design and the literature on market design by considering curtailment we expose a dc load flow model for germany to severe correlated curtailment scenarios we find that additional costs are moderate for the simulated week curtailment of 9 3 non renewable capacity reduces welfare by 2 7 uniform pricing with nodal pricing welfare loss can be reduced by 1 5 distributional differences are multiple times larger for nodal pricing producer surplus rises more and costs are spatially more concentrated at the curtailed power plants consumer surplus becomes lower the difference is unlikely to justify changes of the current market design if also wind or photovoltaic feed in is unavailable economic impacts can decrease or increase but remain in the same order of magnitude the spatial electricity system structure matters more than the volume of curtailment

trade in fossil fuel deposits for preservation and strategic action abstract in the world economy with interdependent markets for fossil fuel deposits and extracted fossil fuel some coalition of countries may fight climate change by purchasing and preserving fossil fuel deposits which would be exploited otherwise assuming that deposits are traded on a market with a uniform price we find that the outcome is efficient if the coalition is a price taker in both markets but inefficient if it acts strategically in the deposit market but not in the fuel market or acts strategically in both markets the latter result demonstrates that harstad s 2012 theorem 1 efficiency despite strategic action result is not robust with respect to changes in the concepts of the deposit market and market or bargaining power in a simplified parametric version of the game a strategically acting coalition buys fewer deposits consumes more fuel and puts up with higher climate damage than in first best

reservation wages and the cost of unemployment this paper studies direct evidence on reservation wages reported in great britain in 1982 to assess 1 whether such asking prices are high and 2 whether variations in these reservation wages are related to differences in measures of the subjective and objective costs of unemployment a majority overall and for various subgroups reports reservation wages no higher than own past wages adjusted for earnings growth but there is nonetheless considerable dispersion in the ratio of reservation to past wages reservation wages are somewhat related to measures of the differential cost of unemployment most clearly for men although the independent role of benefits is often imprecisely measured however exactly which of these costs matter differs significantly according to whether the separation from last employment was voluntary or involuntary copyright 1989 by the london school of economics and political science

measures to enhance the effectiveness of international climate agreements the case of border carbon adjustments abstract actions on climate change which are not supported by all countries are not very effective however full participation in a global climate treaty with meaningful emission reductions is difficult to achieve the non excludability of the public good mitigation provides an incentive to abstain from global action moreover carbon leakage renders it unattractive to join a treaty without full participation we study whether and under which conditions border carbon adjustments bcas can mitigate free riding and reduce carbon leakage in a simple strategic trade model we show that bcas can lead to large stable climate agreements including full participation associated with large global welfare gains if treaties do not restrict membership open membership as this is typical for environmental agreements we caution against restricting accession to treaties exclusive membership as this is typical for trade agreements which may serve individual but not global interests

system friendly wind power how advanced wind turbine design can increase the economic value of electricity generated through wind power abstract previous studies find that the economic value of electricity usd mwh generated by wind power drops with increasing market share different measures can help mitigate the value drop including electricity storage flexible conventional plants expansion of transmission and demand response this study assesses another option a change in design of wind power plants advanced wind turbines that are higher and have a larger rotor compared to rated capacity lower specific rating generate electricity more constantly than classical turbines recent years have witnessed a significant shift towards such advanced technology our model based analysis for northwestern europe shows that such design can substantially increase the spot market value of generated electricity at a 30 penetration rate the value of 1 mwh of electricity generated from a fleet of advanced turbines is estimated to be 15 higher than the value of 1 mwh from classical turbines the additional value is large whether compared to wind generation costs to the value drop or to the effect of alternative measures such as electricity storage extensive sensitivity tests indicate that this finding is remarkably robust the increase in bulk power value is not the only advantage of advanced turbines additional benefits might accrue from reduced costs for power grids and balancing services to fully realize this potential power markets and support policies need to be appropriately designed and signal scarcity investors

climate cooperation with technology investments and border carbon adjustment a central question in climate policy is whether early investments in low carbon technologies are a useful first step towards a more effective climate agreement in the future we introduce a climate cooperation model with endogenous r d investments where countries protect their international competitiveness via border carbon adjustments bca bca raises the scope for cooperation and leads to a non trivial relation between countries prior r d investments and participation in the coalition we find that early investments in r d render free riding more attractive therefore with delayed cooperation on emission abatement and ex ante r d investments the outcome is often characterized by high participation but inefficiently low technology investments and abatement

negotiating a uniform emissions tax in international environmental agreements abstract a consensus appears to be emerging that a global carbon tax is the best policy for managing greenhouse gas emissions emissions tax systems are relatively straightforward cost effective and can generate revenues used to offset other distortionary taxes moreover recent theoretical research weitzman 2014 has demonstrated that under some conditions the globally efficient tax rate can be implemented through a majority voting rule we extend this area of research by examining a uniform emissions tax system in the framework of an international environmental agreement in which only countries that voluntarily participate are subject to the tax we show that in the simplest situation in which countries have identical marginal benefit and cost functions the largest stable agreement consists of two countries and the tax system has little impact on abatement levels our analysis highlights that by ignoring the participation decision and assuming commitment by all parties the efficiency gains from a uniform emissions tax system are overstated

trade unions investment and employment the implications of long term wage contracts and investment in capital on non cooperative wage bargaining between a firm and a union are analysed the union maximises a utilitarian utility function and the firm faces a neoclassical investment problem with internal adjustment costs the monopoly union outcomes with binding contracts is time inconsistent because the union has an incentive to renege on announced low wage strategies once the capital stock has been accumulated the monopoly union outcome without binding contracts leads to credible strategies which correspond to higher wages and lower levels of employment investment and the capital stock efficient contracts give rise to higher employment than monopoly union outcomes whether with or without long term wage contracts the results are illustrated with a numerical example finally when the game between the union and firm is repeated reputational equilibira provide a solution to the problem of time inconsistency

where do all the windmills go influence of the institutional setting on the spatial distribution of renewable energy installation abstract promoting renewable energy sources is one policy response to climate change not only is there currently a debate over the best policy instrument it is also discussed whether the renewable energy production should be expanded centralized at locations with the highest production potential or decentralized close to load it is yet not fully understood what influences the spatial distribution of renewable energy installation i assess the effect of subsidy scheme and market design on the spatial distribution of wind energy installations by comparing a feed in tariffs versus market premiums and b uniform versus nodal pricing the analysis is based on theoretical considerations and using a six node test model that reflects the consumption and renewable resource distribution in several countries and regions the institutional setting has great influence on the spatial distribution and resulting system costs with uniform pricing a market premium only leads to a more decentralized expansion of renewable energy production than a tariff when sites share similar wind conditions spatially more distributed expansion of wind power performs better in terms of total costs and share of wind power in final demand when networks are restricted

where the wind blows assessing the effect of fixed and premium based feed in tariffs on the spatial diversification of wind turbines abstract feed in tariffs fit are among the most important policy instruments to promote renewable electricity production the fixed price fit ffit which guarantee a fixed price for every unit of produced electricity and the premium based fit pfit which pay a premium on top of the market price are commonly implemented in the eu costs for balancing intermittent electricity production may be significantly higher with ffit than with pfit and ffit do not provide any incentive to produce electricity when marginal production costs are high in contrast pfit do provide strong incentives to better match renewable power output with marginal production costs in the system the purpose of this article is to assess the effects of the two tariff schemes on the choice of wind turbine locations in an analytical model we show that both the covariance between wind power supply and demand as well as between the different wind power locations matter for investors in a pfit scheme high covariance with other intermittent producers causes a decrease in market prices and consequently in revenues for wind power investors they are therefore incentivized to diversify the locations of wind turbines to decrease the covariance between different wind power production locations in an empirical optimization model we analyze the effects of these two different schemes in a policy experiment for austria the numerical results show that under a pfit scheme 1 spatial diversification is incentivized 2 the covariance of wind power production with marginal electricity production costs increases and 3 the variances of the wind power output and of residual load decrease if wind power deployment attains 10 of total national electricity consumption

a brave new world kantian nashian interaction and the dynamics of global climate change mitigation abstract we model game theoretic situations in which agents motivated by kantian ethics interact with conventional nashian agents we define the concept of generalized kant nash equilibrium which encompasses the nash equilibrium the kantian equilibrium and the kant nash equilibrium as special cases we show the existence and uniqueness of a kant nash equilibrium in a static game of climate change mitigation and derive its properties in a dynamic setting we analyze a differential game of climate change mitigation in the presence of both types of agents and compare their markov emission strategies for both the static model and the dynamic model as the population share of kantians increases the quality of the environment improves and both types of agents are better off

parametric study of variable renewable energy integration in europe advantages and costs of transmission grid extensions abstract wind and solar energy will play an important role in the decarbonization of the european electricity generation however high shares of these variable renewable energies vres challenge the power system considerably due to their temporal fluctuations and geographical dispersion in this paper we systematically analyze transmission grid extensions as an integration measure for vres in europe we show the effects of grid extensions for fundamental properties of the power system as a function of the penetration and mix of wind and solar energy backup capacity requirements and overproduction are reduced with a powerful overlay transmission grid we determine the costs of the grid extensions in dependence of the vre penetration and mix and find that the grid integration costs remain below 25 of the vre investment costs for all conceivable vre configurations furthermore robust design features of future power systems in terms of grid geometry and flexibility requirements for backup technologies are identified we apply a spatially and temporally highly resolved techno economic model of the european power system for our analysis

the real time price elasticity of electricity the real time price elasticity of electricity contains important information on the demand response of consumers to the volatility of peak prices despite the importance empirical estimates of the real time elasticity are hardly available this paper provides a quantification of the real time relationship between total peak demand and spot market prices we find a low value for the real time price elasticity which may partly be explained from the fact that not all users observe the spot market price if we correct for this phenomenon we find the elasticity to be fairly low for consumers currently active in the spot market if this conclusion applies to all users this would imply a limited scope for government intervention in supply security issues

the role of feed in tariff in the curtailment of wind power in china abstract while china s wind power initiative has experienced rapid growth serious curtailment issues persist though some studies have investigated this matter we explain this phenomenon from the novel perspective of excess capacity we first set up a theoretical model to explore the mechanism behind excess investment and find that the sticky feed in tariff fit and declining costs of wind power generate high mark up for wind power investors leading to a higher probability of excessive investment the theoretical prediction is empirically tested with a probit and tobit model using provincial level data between 2009 and 2016 the estimation results show that a 0 1 yuan increase in the mark up leads to a 2 3 increase in the rate of curtailed wind power based on the estimation results we simulate several scenarios to assess quantitatively how an improved policy design could have alleviated the curtailment issue simply increasing the frequency of the fit rate adjustment while maintaining the same subsidy reduction level between 2009 and 2016 could have reduced the curtailed wind power by 23 to 27 billion kwh accounting for 15 17 of actual curtailed wind power if the policy were better designed to reflect the declining trend of wind power costs more accurately the curtailment rates could have been further reduced by 2 81 corresponding to a reduction in wasted wind energy of 43 billion kwh or 28 of actual curtailment although accepting curtailment for a certain period could help to accelerate renewable energy deployment our analysis shows that the fit policy design could have been improved to reduce welfare loss these findings can not only assist the chinese government in framing effective policies but also may be applied to other emerging technologies or industries that require subsidy support

self enforcing environmental agreements and trade in fossil energy deposits abstract the literature on self enforcing environmental agreements sieas focuses on de mand side emission reduction policies to our knowledge harstad 2012 is the only study on sieas in which countries purchase fossil energy deposits to prevent their exploitation he finds that for any coalition size there exists a small subset of parameters different for each size such that the coalition of that size is stable however the comparison of harstad s results with the prevailing demand side siea analyses is hampered by major differences in the structure of the respective game models this paper develops a game model with a deposit market and deposit purchases for preservation that is in line with some demand side siea literature it turns out that either no coalition is stable or the grand coalition is the only stable coalition we compare the outcome of our model not only with harstad s model but also with eichner and pethig s 2015 model of the formation of sieas in which climate policy takes the form of demand side emissions taxes

impacts of a common green certificate market on electricity and co2 emission markets in the nordic countries abstract the purpose of this study is to analyze the effects of introducing a common nordic system for tradable green certificates tgcs on the electricity market and a future market for tradable co 2 emission permits teps in the analysis the energy system model generator markal was used to model the electricity and district heating supply systems in the four nordic countries sweden norway finland and denmark it is shown that the introduction of tgc quotas reduces wholesale electricity and tep prices the impact on the latter is very pronounced retail electricity prices may become lower or higher depending on the tgc quota than if obligations to fulfill tgc quotas were absent the tgc scheme s efficiency in reducing a specific amount of co 2 emissions is also compared to the corresponding efficiency of a tep scheme involving a broader range of technologies furthermore obligations to fulfill tgc quotas affect investment incentives for new non renewable electricity supply this seems especially true for gas fired power plants finally it is indicated that electricity supply based on biomass combustion dominates the tgc scheme at least in the short run

estimating the value of wind energy using electricity locational marginal price abstract there is an increasing interest in adding renewables such as wind to electricity generation portfolios in larger amounts as one response to concern about atmospheric carbon emissions from our energy system and the resulting climate change most policies with the aim of promoting renewables e g rps fit do not explicitly address siting issues which for wind energy are currently approached as the intersection of wind resource land control and transmission factors this work proposes the use of locational marginal price lmp the location and time specific cost of electricity on the wholesale market to signal locations where generation can address electricity system insufficiency after an examination of the spatial and temporal behavior of lmp in michigan over the first two years of wholesale market operation this work combines lmp with wind speed data to generate a value metric high value sites in michigan tend to be sites with higher wind speeds with the bulk of value accruing in the fall and winter seasons

market failures of market coupling and counter trading in europe an illustrative model based discussion the horizontal integration of the energy market and the organization of transmission services remain two open issues in the restructured european electricity sector the coupling of the french belgian and dutch electricity markets the trilateral market in november 2006 was a real success the extension of the system to germany in november 2010 also proceeded smoothly and the intent is to continue with the same market architecture but market coupling is based on a zonal system which has often failed in meshed grids this may cast doubts on what will happen in the future when electricity demand picks up again and wind develops the nodal system has generally been more successful than zonal architectures but its implementation is not currently foreseen in the eu this paper analyzes versions of market coupling that differ by the organization of counter trading while underplayed in current discussions counter trading could become a key element of market coupling as its geographic coverage expands and wind penetrates we simplify matters by assuming away strategic behavior between the energy and counter trading markets and conduct the analysis on a stylized six node example taken from the literature we simulate market coupling for different assumptions of zonal decomposition and coordination of transmission system operators tsos we show that these assumptions matter even in the absence of strategic behavior market coupling can be quite vulnerable to the particular situation on hand countertrading can work well or completely fail and it is not clear beforehand what will prevail our analysis relies on standard economic notions such as social welfare and generalized nash equilibrium but the use of these notions is probably novel the nodal organization is the reference first best scenario different zonal decompositions and degrees of coordination are then studied with respect to this first best solution

the merit order effect a detailed analysis of the price effect of renewable electricity generation on spot market prices in germany the german feed in support of electricity generation from renewable energy sources has led to high growth rates of the supported technologies critics state that the costs for consumers are too high an important aspect to be considered in the discussion is the price effect created by renewable electricity generation this paper seeks to analyse the impact of privileged renewable electricity generation on the electricity market in germany the central aspect to be analysed is the impact of renewable electricity generation on spot market prices the results generated by an agent based simulation platform indicate that the financial volume of the price reduction is considerable in the short run this gives rise to a distributional effect which creates savings for the demand side by reducing generator profits in the case of the year 2006 the volume of the merit order effect exceeds the volume of the net support payments for renewable electricity generation which have to be paid by consumers

the market value of variable renewables the effect of solar wind power variability on their relative price this paper provides a comprehensive discussion of the market value of variable renewable energy vre the inherent variability of wind speeds and solar radiation affects the price that vre generators receive on the market market value during windy and sunny times the additional electricity supply reduces the prices because the drop is larger with more installed capacity the market value of vre falls with higher penetration rate this study aims to develop a better understanding on how the market value with penetration and how policies and prices affect the market value quantitative evidence is derived from a review of published studies regression analysis of market data and the calibrated model of the european electricity market emma we find the value of wind power to fall from 110 of the average power price to 50 80 as wind penetration increases from zero to 30 of total electricity consumption for solar power similarly low value levels are reached already at 15 penetration hence competitive large scale renewable deployment will be more difficult to accomplish than as many anticipate

international cooperation for sale abstract this paper shows that strong asymmetry among countries warrants a change in the rules of the game of global public goods provision with the consequence that cooperation by some countries is bought by others and aggregate welfare is increased perhaps substantially side payments on their own have virtually no effect on the outcomes that can be sustained by self enforcing cooperative agreements but when the rules of the game are changed by strong asymmetry when some countries are effectively committed to being non signatories to an agreement eschewing money transfers side payments become the vehicle for increasing participation in a cooperative agreement

feed in tariff vs renewable portfolio standard an empirical test of their relative effectiveness in promoting wind capacity development abstract this paper examines the relative effectiveness of feed in tariff fit and renewable portfolio standard rps in promoting wind capacity development using panel data conservative estimates suggest that on average across countries fit increases total wind capacity more than rps by a magnitude of about 1800 mw when using time variant policy indicators the difference between the two policies increases to nearly 2000 mw roughly 8 of 2009 cumulative capacity in germany as for annual wind capacity since 2005 this paper has found no significant difference between fit and rps it is also found that wind energy development responds to high electricity demand and high oil dependence

the influence of spatial effects on wind power revenues under direct marketing rules abstract in many countries investments in renewable technologies have been accelerated by fixed feed in tariffs for electricity from renewable energy sources res while fixed tariffs accomplish this purpose they lack incentives to align the res production with price signals today the intermittency of most res increases the volatility of electricity prices and makes balancing supply and demand more complicated therefore support schemes for res have to be modified recently germany launched a scheme which gives wind power operators the monthly choice to either receive a fixed tariff or to risk a subsidized access to the wholesale electricity market this paper quantifies revenues of wind turbines under this new subsidy and analyzes whether when and where producers may profit we find that the position of the wind turbine within the country significantly influences revenues in terms of eur mwh the results are important for wind farm operators deciding whether electricity should be sold in the fixed feed in tariff or in the wholesale market however no location is persistently i e in every calendar month of the year above the average this limits the effect of the new subsidy scheme on investment locations and long term improvements in the aggregated wind feed in profile

buy coal and act strategically on the fuel market abstract a coalition of given size fights climate change by a policy of purchasing fossil fuel deposits and it seeks to manipulate the fuel price in its favor assuming that non signatories are price takers in the fuel market harstad 2012 designs a policy of trading deposits that attains efficiency despite the coalition s option to act strategically in the fuel market the deposit transactions constituting that policy include the trade of deposits which the non signatories would have exploited and the coalition will exploit the present paper shows that in a proper subset of economies a simpler policy is also efficient that consists of deposit purchases for preservation only in these economies the coalition is unable to raise its welfare above the level in the benchmark case of fuel price taking in the economies where the efficient policy requires deposit transactions for exploitation the coalition is better off and the non signatories are worse off than in case of price taking

generation capacity expansion in liberalized electricity markets a stochastic mpec approach this paper proposes a bilevel model to assist a generation company in making its long term generation capacity investment decisions considering uncertainty regarding the investments of the other generation companies the bilevel formulation allows for the uncoupling of investment and generation decisions as investment decisions of the single investing generation company are taken in the upper level with the objective to maximize expected profits and generation decisions by all companies are considered in the lower level the lower level represents the oligopolistic market equilibrium via a conjectured price response formulation which can capture various degrees of strategic market behavior like perfect competition the cournot oligopoly and intermediate cases

spatial dependencies of wind power and interrelations with spot price dynamics abstract wind power has seen strong growth over the last decade and increasingly affects electricity spot prices in particular prices are more volatile due to the stochastic nature of wind such that more generation of wind energy yields lower prices therefore it is important to assess the value of wind power at different locations not only for an investor but for the electricity system as a whole in this paper we develop a stochastic simulation model that captures the full spatial dependence structure of wind power by using copulas incorporated into a supply and demand based model for the electricity spot price this model is calibrated with german data we find that the specific location of a turbine i e its spatial dependence with respect to the aggregated wind power in the system is of high relevance for its value many of the locations analyzed show an upper tail dependence that adversely impacts the market value therefore a model that assumes a linear dependence structure would systematically overestimate the market value of wind power in many cases this effect becomes more important for increasing levels of wind power penetration and may render the large scale integration into markets more difficult

renewable electricity generation in germany a meta analysis of mitigation scenarios german energy policy targets envision a share of electricity from renewable energy sources res e of at least 80 in 2050 how can the transformation of the german electricity sector be achieved and at what costs this paper addresses these questions by means of a meta analysis of 10 recent model based mitigation scenarios for germany it turns out that the scenarios exploit the three basic strategic options of increasing the share of res e domestic res e generation electricity demand reductions and res e imports to substantially different extents domestic res e generation increases in all scenarios particularly from onshore and offshore wind scenarios that rely heavily on reducing electricity demand require a relatively low expansion of domestic res e generation despite detailed technical analyses insights on the costs of the transformation remain limited a discussion of underlying scenario assumptions reveals that it is unclear whether i res e and system integration technology development will be as cost competitive as postulated ii implicitly assumed institutional requirements will be realized and iii relevant actors in the transformation process will be incentivized accordingly therefore future research should pursue a thorough assessment of strategic options for transforming the german electricity system that consistently integrates technologies institutions and actors

transmission and generation investment in electricity markets the effects of market splitting and network fee regimes abstract we propose an equilibrium model that allows to analyze the long run impact of the electricity market design on transmission line expansion by the regulator and investment in generation capacity by private firms in liberalized electricity markets the model incorporates investment decisions of the transmission system operator and private firms in expectation of an energy only market and cost based redispatch in different specifications we consider the cases of one vs multiple price zones market splitting and analyze different approaches to recover network cost in particular lump sum generation capacity based and energy based fees in order to compare the outcomes of our multilevel market model with a first best benchmark we also solve the corresponding integrated planner problem using two test networks we illustrate that energy only markets can lead to suboptimal locational decisions for generation capacity and thus imply excessive network expansion market splitting heals these problems only partially these results are valid for all considered types of network tariffs although investment slightly differs across those regimes

self enforcing environmental agreements and international trade abstract in the basic model of the literature on international environmental agreements ieas barrett 1994 rubio and ulph 2006 the number of signatories of self enforcing ieas does not exceed three if non positive emissions are ruled out we extend that model by introducing a composite consumer good and fossil fuel that are produced and consumed in each country and traded on world markets when signatory countries act as a stackelberg leader and emissions are positive the size of stable ieas may be significantly larger in our model with international trade this would be good news if larger self enforcing ieas would lead to stronger reductions of total emissions unfortunately in the presence of self enforcing ieas total emissions turn out to be only slightly less than in the business as usual scenario independent of the number of signatories we also investigate the role of international trade by comparing our free trade results with the outcome in the regime of autarky our autarky model turns out to be coincident with the basic model of the literature alluded to above we contribute to that literature by showing that in autarky the outcome of self enforcing ieas is also almost the same as in the business as usual scenario

building climate coalitions on preferential free trade agreements in this paper we discuss the endogenous formation of climate coalitions in an issue linkage regime in particular we propose a preferential free trade agreement on which a climate coalition should be built the basic idea is that the gains of free trade can provide strong incentives for countries to join the coalition as a framework a multi stage strategic trade model is employed in which each country may set an emission cap being effective on a permit market in addition a discriminatory import tariff may be imposed on dirty goods however at the heart of our approach is a preferential free trade arrangement among the members of a climate coalition leading to a favourable shift in the terms of trade as a main result trade liberalisation is found as an institution highly effective in building climate coalitions in particular the parametrical simulation of the model shows that participation in joint emission reduction is higher consumption patterns are more environmentally friendly and coalitional welfare is much more improved than in case of a single issue environmental agreement

free trade and global warming a trade theory view of the kyoto protocol this paper demonstrates how three important results in environmental economics true under mild conditions in closed economies are false or need serious amendment in a world with international trade in goods since the three results we highlight have framed much of the ongoing discussion and research on the kyoto protocol our viewpoint from trade theory suggests a re examination may be in order specifically we demonstrate that in an open trading world but not in a closed economy setting 1 unilateral emission reductions by the rich north can create self interested emission reductions by the unconstrained poor south 2 simple rules for allocating emission reductions across countries such as uniform reductions may well be efficient even if international trade in emission permits is not allowed and 3 when international emission permit trade does occur it may make both participants in the trade worse off and increase global emissions

potentially harmful international cooperation on global public good provision recent international climate negotiations suggest that complete agreements are unlikely to materialize instead partial cooperation between like minded countries appears a more likely outcome in this paper we analyze the effects of such partial cooperation between like minded countries in doing so we link the literature on partial cooperation with so called matching approaches matching schemes are regarded as providing a promising approach to overcome undersupply of public goods like climate protection the functioning of matching mechanisms in a setting with an incomplete agreement i e a contract where only a subset of the players participates has however not been investigated yet this paper fills this research gap by analyzing incomplete matching agreements in the context of international climate protection we analyse their effect on both welfare and the global climate protection level we show that matching coalitions may bring about a decline in global public good provision and a reduction in the welfare of outsiders

large scale wind power integration and wholesale electricity trading benefits estimation via an ex post approach abstract the integration of large scale wind power has brought about a series of challenges to the power industry but at the same time a number of benefits are being realized among those the ability of wind power to cause a decline in the electricity market prices has been recognized in quantifying this effect some models used in recent years are based on simulations of the market supply side and the price clearing process the accuracy of the estimates depend on the quality of the input data the veracity of the adopted scenarios and the rigorousness of the solution technique in this work a series of econometric techniques based on actual ex post wind power and electricity price data are implemented for the estimation of the impact of region wide wind power integration on the local electricity market clearing prices and the trading savings that stem from this effect the model is applied to the case of spain where the estimated savings are compared against actual credit and bonus expenses to ratepayers the implications and extent of these results for current and future renewable energy policy making are discussed

the case for international emission trade in the absence of cooperative climate policy we evaluate the efficacy of international trade in carbon emission permits when countries are guided strictly by their national self interest to do so we construct a calibrated general equilibrium model that jointly describes the world economy and the strategic incentives that guide the design of national abatement policies countries decisions about their participation in a trading system and about their initial permit endowment are made noncooperatively so a priori it is not clear that permit trade will induce participation in international abatement agreements or that participation will result in significant environmental gains despite this we find that emission trade agreements can be effective that smaller groupings pairing developing and developed world partners often perform better than agreements with larger rosters and that general equilibrium responses play an important role in shaping these outcomes