a regional energy hub for achieving a low carbon energy transition abstract the transition to a low carbon energy economy will remain a cornerstone of national energy policies of countries committed to the climate change accord for decades to come we think that transmission investment is one key policy instrument amongst other to help with this transition we propose an enhanced role for investing in transmission capacity for inter regional trade to allow effective fuel switching among countries through a physically connected market we develop a conceptual framework of regional energy hubs and propose a cost minimization model in support of a transmission investment strategy that integrates i a key geopolitical parameter for countries that are geographically close in a region but under different political jurisdictions judged as stable and receptive to firm trading arrangements ii an economic parameter related to the fuel mix where the differences in a country s supply and demand characteristics are significant enough for allow mutual benefits to be realized through cost reduction iii an environmental parameter linked to a country s carbon intensity that could benefit from the resources of a neighboring jurisdiction with lower intensities and iv a financial parameter for each country within a region capable of attracting investment capital a connected regional energy hub offers large economic and environmental benefit for transition to a low carbon energy economy

the implications of brexit for the electricity sector in great britain trade offs between market integration and policy influence this paper examines the trade off between the economic gains to great britain gb from being integrated into the eu electricity market on the one hand and a loss of influence over policy and rule making on the other the aim is not to predict how this trade off will be resolved in practice but rather to lay out what is at stake on both sides of the equation since the late 2000s the electricity market in gb has become increasingly integrated with continental european markets through market coupling and increasing interconnection capacity with further integration expected up to the mid 2020s estimates of the economic benefits of this integration range up to the order of several 100 m to 1bn a year representing the economic cost of a reversal of such integration on the other hand maintaining and expanding electricity market integration would require the acceptance of electricity policies and regulations made in european institutions in which uk actors would have little if any voice an intermediate multilateral approach offering the possibility of retaining market integration with less cost in terms of influence is proposed

a note on interest on required reserves as an instrument of monetary control abstract the purpose of this paper is to evaluate the potential role of interest on required reserves as a monetary control instrument it is found that an increase in the interest rate paid on reserves held at the federal reserve has counteracting effects on the variability of the money stock hence there is an optimal setting for the interest rate on required reserves that theoretically may include or lie anywhere between the extreme cases of no interest payment and the payment of interest at the maximum feasible level

sustainable innovation business models and economic performance an overview sustainable development requires radical and systemic innovations such innovations can be more effectively created and studied when building on the concept of business models this concept provides firms with a holistic framework to envision and implement sustainable innovations for researchers the concept provides an analytical tool that allows them to assess the interplay between the different aspects that firms combine to create ecological economic and social value in addition the business model concept provides a link between the individual firm and the larger production and consumption system in which it operates this paper provides an introduction to the special issue which emerged from selected papers presented at the erscp emsu 2010 conference held in delft the netherlands papers in the special issue cover a broad range from a conceptual discussion resulting in a research agenda the assessment of diffusion of specific business models such as product service systems the introduction of new management tools for business transition management to case studies on how specific business models evolved in specific communities together these papers provide insight into the promise of the business model concept for understanding and advancing sustainable innovation

electricity market integration decarbonisation and security of supply dynamic volatility connectedness in the irish and great britain markets abstract this study investigates the volatility connectedness between the irish and great britain electricity markets and how it is driven by changes in energy policy institutional structures and political ideologies we assess various aspects of this volatility connectedness including static unconditional vs dynamic conditional symmetric vs asymmetric characteristics between 2009 and 2018 we find that the volatility connectedness is time varying and it is significantly affected by important events policy reforms or market re designs such as brexit oil price slump an increasing share of renewables and fluctuations in the exchange rates our asymmetric analysis shows that magnitude of the good volatility connectedness is marginally larger than that of the bad volatility connectedness our result suggests that good volatility levels would be even higher once the irish market adopts the carbon price floor therefore supporting renewable generation by setting an appropriate price of carbon in interconnected wholesale electricity markets will improve market integration

the economic consequences of brexit energy in this paper we raise a number of issues that are important for the uk to consider in the light of its decision to leave the european union eu the first of these is the nature of the eu single market in electricity and gas and the uk s role within this the second is the nature of uk energy policy in the light of brexit and the opportunities for changing this and third we consider some of the key issues to be addressed in a negotiating position with the eu

strategic eurasian natural gas market model for energy security and policy analysis formulation and application to south stream abstract the mathematical formulation of a strategic eurasian natural gas market model is presented the model represents horizontal oligopolistic relationships among producers bilateral market power between producer russia and transit ukraine countries detailed transport constraints and operation decisions over a 20 year time horizon to demonstrate the model s capabilities a financial and market analysis of the proposed south stream gas pipeline from russia via the black sea to south europe is summarized insights obtained include the following first expectations of high demand growth in europe and or transit risks do not justify the construction of the south stream pipeline because under all demand and ukraine transit interruption scenarios the net benefits to the south stream participants are negative the npv ranges from 1 9 billion bn to 7 4 bn second ukraine s perception of high transit market power vis a vis russia may trigger the construction of the otherwise unprofitable south stream project thus under ukraine s high transit market power scenario the npv of south stream ranges between 2 4 bn and 24 5 bn third we find that the south stream investment increases the efficiency of the european gas market under the following conditions i when gas demand in europe grows 2 per year up to 2030 ii when ukraine poses high transit market power or iii under a combination of severe transit risks through ukraine and low demand scenarios in europe it should be noted that the value of south stream to both its project sponsors and the market as a whole is much higher when ukraine exercises transit market power than under the high demand scenario therefore whether ukraine is likely to wield market power is crucial to the success of the south stream project because that is the only scenario in which the project yields both a positive expected npv to its sponsors and the highest value to the market as a whole

investment options and bargaining power the eurasian supply chain for natural gas we use cooperative game theory to analyze how the architecture of the pipeline network determines the power structure in the supply chain for russian gas if the assessment is narrowly focused on the abilities to obstruct flows in the existing system the main transit countries belarus and ukraine appear to be strong if investment options are accounted for however russia achieves clear dominance we show that options to bypass one of the transit countries are of little strategic importance compared to russia s direct access to its customers through the baltic sea comparing the results of our calibrated model with empirical evidence obtained from transit and import agreements we find that the shapley value explains the power of major transit countries better than the core and the nucleolus

sustainable business models as boundary spanning systems of value transfers abstract sustainable innovation requires collaboration across organizational boundaries hence in this research we take a boundary spanning perspective on the business model this perspective focuses on how value is created and captured across organizational boundaries by investigating the value transfers between the focal organization and the external network of business model actors we analyze the business models of 64 innovative sustainable organizations from the netherlands in terms of how environmental and social sustainability is manifested in the content structure and governance of their business models we find that environmental sustainability is mainly represented in value creation content whereas social sustainability is achieved by serving underprivileged user groups and mainly is reflected in value capture content we observe that social sustainability in both for profit and non profit organizations is often achieved by having an imbalance in value exchanges that is compensated elsewhere in the business model in terms of business model structure we show that sustainable organizations use the same underlying business model structures as can be found in conventional firms all in all we demonstrate that analyzing the environmental and social sustainability of organizations using the boundary spanning perspective on business models provides complementary insights to the traditional component based view of the business model

long term spread option valuation and hedging this paper investigates the valuation and hedging of spread options on two commodity prices which in the long run are in dynamic equilibrium i e cointegrated the spread exhibits properties different from its two underlying commodity prices and should therefore be modelled directly this approach offers significant advantages relative to the traditional two price methods since the correlation between two asset returns is notoriously hard to model in this paper we propose a two factor model for the spot spread and develop pricing and hedging formulae for options on spot and futures spreads two examples of spreads in energy markets the crack spread between heating oil and wti crude oil and the location spread between brent blend and wti crude oil are analyzed to illustrate the results

going one s own way drivers in developing business models for sustainability business models have received much attention in recent years due to their importance in the fundamental logic of every company this paper is based on a qualitative empirical research study conducted in cooperation with 10 austrian companies in 2014 it aims to investigate business models for sustainability in order to better understand how they operate and what the drivers for developing these business models are this is a cross industry sample covering companies showing notable sustainability activities in fact half of the companies were founded with the intention of complying with sustainability principles the results show that business models incorporating aspects of sustainability do not differ substantially from traditional business models however they do require specific adaptations and extensions furthermore the findings highlight the significance of company leaders in organizing change processes so as to encompass sustainable business practices the findings reveal that business models undergo constant change and that sustainability plays a central role both internally and externally the results gained allow for a deeper understanding of the motivational aspects and drivers needed in developing business models for sustainability and serve as a solid basis for further research in this field

greener more integrated and less volatile a quantile regression analysis of italian wholesale electricity prices abstract this paper provides estimates of quantile regression models of the relationship between italian day ahead electricity prices the supply of renewables and the inception of a new cable sapei linking sardinia with the italian peninsula in the 2006 2015 time window the results confirm the merit order effects detected in the existing literature both for photovoltaics and wind power more strongly in market conditions characterised by moderately low price levels and with some implied increase in volatility the new cable has apparently challenged the ability of power generating companies to extract value through price spikes has mitigated volatility and its effects have been complementary with those of renewables effects from photovoltaics are more sensitive to robustness checks differences across zonal markets are nonetheless detected

a preliminary assessment of the market coupling arrangement on the kontek cable this paper presents a preliminary assessment of the market coupling arrangement on the kontek kt cable between east denmark and germany and an assessment of the original auction mechanism kt the new spot price area was introduced in germany on october 5 2005 to facilitate a market coupling arrangement on the kt cable between east denmark and germany we would expect the kt price to correlate more with the european energy exchange eex price because arbitrage normally levelizes the price however spot prices in late 2005 were both high and volatile because congestion management practices in sweden transferred internal bottlenecks to the cable between sweden and east denmark since spot prices were equal in east denmark and the kt area for a substantial time it implies that some hours had no congestion on the kt cable market players valued the previous monthly auctions for transmission capacity more than the daily auctions compared to the daily auctions market players received smaller payoffs on average for the market coupling arrangement and the smallest payoffs for the monthly auctions

speculative trading of electricity contracts in interconnected locations abstract we derive an investor s optimal trading strategy of electricity contracts traded in two locations joined by an interconnector the investor employs a price model which includes the impact of her own trades the investor s trades have a permanent impact on prices because her trading activity affects the demand of contracts in both locations additionally the investor receives prices which are worse than the quoted prices as a result of the elasticity of liquidity provision of contracts furthermore the investor is ambiguity averse so she acknowledges that her model of prices may be misspecified and considers other models when devising her trading strategy we show that as the investor s degree of ambiguity aversion increases her trading activity decreases in both locations and thus her inventory exposure also decreases finally we show that there is a range of ambiguity aversion parameters where the sharpe ratio of the trading strategy increases when ambiguity aversion increases

the effects of wind generation capacity on electricity prices and generation costs a monte carlo analysis abstractwe use monte carlo analysis to examine the potential of increased renewable generation to provide a hedge against variability in energy prices and costs fuel costs electricity demand and wind generation are allowed to vary and a unit commitment and economic dispatch algorithm is employed to produce cost minimizing generation schedules under different levels of installed wind capacity increased wind capacity reduces the mean and the variance of production costs but only the variance of electricity prices wind generators see their market revenues increase while consumer payments and fossil generator profits do not considerably vary as wind capacity increases risk aversion is captured by considering the conditional value at risk for both consumers and producers the optimal level of wind generation increases as risk aversion increases due to the potential of wind to act as a hedge against very high electricity prices in high fuel price scenarios

reserve requirements and control of a broad monetary aggregate abstract when at least one component of a broad monetary aggregate pays a market determined interest rate this paper shows that monetary control does not necessarily improve if all reserve ratios are set at feasible maximums and equalized across all components

interpreting concentration indices in the secondary market for natural gas transportation the implication of pipeline residual rights abstract in 1992 the u s federal energy regulatory commission created a secondary market for natural gas transportation whereby shippers holding firm transportation capacity on interstate natural gas pipelines can compete with the pipeline in the provision of transportation services however if a shipper does not use some of its contracted firm transportation capacity the pipeline can resell that capacity as interruptible transportation that is the pipeline has residual rights with respect to firm transportation capacity contracted for by shippers we demonstrate that these residual rights can have a significant effect on the competitiveness of the secondary market for natural gas transportation a consequence of these residual rights is that the secondary market for natural gas transportation may be considerably more competitive than indicated by measures of concentration like the widely used herfindahl hirschman index

welfare and competition effects of electricity interconnection between ireland and great britain this study analyzes the effects of additional interconnection on welfare and competition in the irish electricity market i simulate the wholesale electricity markets of the island of ireland and great britain for 2005 i find that in order for the two markets to be integrated in 2005 additional interconnection would have to be large the amount of interconnection decreases for high costs of carbon since this causes the markets to become more similar this suggests that in the absence of strategic behavior of firms most of the gains from trade derive not from differences in size between countries but from technology differences and are strongly influenced by fuel and carbon costs social welfare increases with interconnection although at a decreasing rate as the amount of interconnection increases there are also positive effects on competition in ireland the less competitive of the two markets finally it is unlikely that private investors will pay for the optimal amount of interconnection since their returns are significantly smaller than the total social benefit of interconnection

the effect of a new power cable on energy prices volatility spillovers abstract in this paper we estimate volatility spillovers before and after the introduction of a new cable linking different electricity market zones using wholesale electricity prices for sardinia and two neighbouring italian market zones for the period 2005 2015 we focus on the effects of the sapei cable fully operational since march 2011 var garch estimates indicate that the sapei cable allowed for stronger volatility transmission towards sardinia a smaller zone and a net importer from its new neighbour the central southern zone albeit the effect was significant only off peak higher conditional correlations between zonal prices are also observed after the cable was introduced some implications are drawn about the interaction between market size export positions congestion and volatility transmission

model misspecification and underdiversification in this paper we study intertemporal portfolio choice when an investor accounts explicitly for model misspecification we develop a framework that allows for ambiguity about not just the joint distribution of returns for all stocks in the portfolio but also for different levels of ambiguity for the marginal distribution of returns for any subset of these stocks we find that when the overall ambiguity about the joint distribution of returns is high then small differences in ambiguity for the marginal return distribution will result in a portfolio that is significantly underdiversified relative to the standard mean variance portfolio

a note on reserve requirements and monetary control with a flexible deposit rate abstract this paper examines the relationship between reserve ratios and monetary control when deposit rates are flexible in the short run for a total reserves operating target it is shown that an increase in the deposit reserve ration may raise the variance of a monetary aggregate under an interest rate operating target it is also shown that the deposit reserve ratio affects both the expected value and the variance of a monetary aggregate these findings for the two alternative operating targets differ sharply from previous results which were based on the assumption of fixed deposit rates

the benefits of integrating european electricity markets this paper builds on and extends work under contract ener b1 491 1 2012 published as newbery et al 2013

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

strategic perspectives of corporate sustainability management to develop a sustainable organization sustainable development refers to an economic environmental and social development that meets the needs of the present and does not prevent future generations from fulfilling their needs in this context businesses play an important role however progress towards sustainable development has been slow indicating the need for more concrete guidance that will allow businesses to act strategically and successfully in a sustainable way this theoretical paper connects three distinct but complementary dimensions of strategic management as viewed from the perspective of sustainability in order to encourage the integration of sustainability issues into corporate activities and strategies these three dimensions are strategy process strategy content and strategy context sixteen propositions related to these dimensions have been developed to explore the contributions of corporate sustainability management to the creation of value for businesses society and nature this theoretical discussion contributes to existing research in that it reveals relationships between strategic management and sustainable development and provides an agenda for further empirical research

transforming sustainability challenges into competitive advantage multiple case studies kaleidoscope converging into sustainable business models abstract recent tendency has been pushing organizations to rethink their role in society and making organization reflect that profit may not be the only and foremost important business performance criteria thus recent literature has been exploring the sustainable business models sbm s as a way to insert sustainability goals into the core of business decisions this research aims to advance in this body of knowledge and proposes a theory and practice based framework to support organizations towards more sbm making explicit main elements to align business to sustainability performance goals to support the argument that there is no unique solution to design sbm this research performs a multiple case studies in eleven organizations from diverse sectors situated in brazil and in the united kingdom results show that sbm is not an attempt to deny business as usual perspective but rather it seeks to complement this view by adding a more axiological and systemic approach in particular three convergent aspects were identified in the case studies as relevant efforts support the integration of sustainability into sbm s value creation and delivery system 1 the connection between business purpose and employees values and believes 2 the pro active and clear engagement in solving sustainability problems and 3 the need for system level changes to enable successful sbm s this systemic thinking is highlighted by the concept emerged from the research the cascaded sustainable value captured representing that as sbm s are part of a value network value delivered by the organizations is captured not only by stakeholders to which they have direct contact but rather this is also deployed to stakeholders of focal company s stakeholders this distinction is not always trivial for companies so the proposed concept can support advances in sbm discussions further studies are called to the challenge of making explicit that sbm s are not only companies that directly addresses a specific social and or environmental problem but rather is an emerging paradigm on how to manage efficient businesses in any sector to add positive value to the globe

elecxit the cost of bilaterally uncoupling british eu electricity trade abstract the uk s withdrawal from the european union could mean that it leaves the eu s internal energy market for electricity elecxit this paper develops methods to study the longer term consequences of this electricity market disintegration especially the end of market coupling before european electricity markets were coupled different market closing times forced traders to commit to cross border trading volumes based on anticipated market prices interconnector capacity was often under used and power sometimes flowed from high to low price areas a model of these market frictions is developed empirically verified on 2009 data before french and british market coupling and applied to estimate the costs of market uncoupling in 2030 a less efficient market and the abandonment of some planned interconnectors would raise generation costs by 700 m a year 2 compared to remaining in the internal energy market this result is sensitive to how the british and french electricity systems develop over the coming decades economic losses are four times greater 2700 m a year if france retains substantial nuclear capacity due to its low marginal costs conversely losses are reduced by two thirds if uk weakens its decarbonisation ambitions as lower carbon prices subsidise british fossil fuel generation allowing electricity prices to converge with those in france a hard elecxit would make british prices rise and french prices fall in three of our four scenarios with the opposite movements in the fourth scenario

an eco critical perspective on business models the value triangle as an approach to closing the sustainability gap abstract despite business models having been discussed thoroughly by academics there are still some epistemological and ontological issues that have yet to be resolved business models seem to have stalled at the technological era and have not fully engaged with the era of sustainability the purpose of our paper is to add a new lens and richness to sustainable business model research by building on the need for more interdisciplinary approaches this paper applies an eco critical approach to analyse the 20 most often cited business model frameworks we explore the conventional understanding of the business models based on the language applied and reflect on gaps in the current perspectives of sustainability the analysis shows that existing business model frameworks exclude natural and social aspects of organisational environment from the discussion and tend to neglect the interrelationships between economic and not economic actors as well as the intertemporal trade offs based on the results of the analysis we propose a new sustainable business model framework named value triangle which explicitly includes as core elements society incorporating the natural environment and future generations and three types of co created and co delivered value public partner and customer the value triangle together with the corresponding canvas is presented through a business case for sustainability represented by italian company loccioni the results show that the proposed business model framework and canvas allow managers to understand analyse and evaluate their business models along all three dimensions of sustainability economic social and environmental simultaneously such an understanding helps drive the field towards making a meaningful contribution to solving the un global challenges and sustainability agenda

a review of balancing costs in italy before and after res introduction abstract the massive introduction of res in electricity markets is recognized to have induced a merit order effect on wholesale prices while day ahead prices are likely to decline as res e production increases the effects on balancing market sessions are more ambiguous taking into account the northern italian zone characterized by a high solar pv and hydro penetration we provide empirical evidence that balancing quantities decreased while costs increased between two samples associated with low 2006 08 and high 2013 15 res levels we estimate balancing costs for different technologies and compare their dynamics across specific hours we find evidence of increasing balancing prices in particular market conditions that we interpret as a signal of strategic use of real time sessions by conventional producers prone to the merit order effect in the day ahead market we compare our results to those obtained in the german market where on the contrary balancing costs have decreased and postulate that the different market designs may explain these results our findings suggest that the italian policy makers should carefully monitor all trading sessions especially those close to real time to avoid the exercise of market power by few operators allowed to guarantee system security and additionally to promptly adopt a capacity market

shifting load through space the economics of spatial demand side management using distributed data centers demand side flexibility dsf in the electricity grid has become an active research area in recent years while temporal flexibility e g load shedding load shifting is already discussed intensively in literature spatial load migration still is an under researched type of dsf spatial load migration allows us to instantly migrate power consuming activities among different locations data centers dcs are power intensive and process information goods since information goods are easily transferable through communication networks power intensive processing of information goods is not necessarily tied to a specific location consequently geographically distributed dcs inherit in theory a considerable potential to globally migrate load we analyze the economics of spatially migrating load to provide balancing power using geographically distributed dcs we assure that neither of the participating electricity grids will be burdened by this mechanism by using historical data to evaluate our model we find reasonable economic incentives to migrate positive as well as negative balancing power in addition we find that current scenarios favor the migration of negative balancing power our research thus reveals realistic opportunities to virtually transfer balancing power between different market areas worldwide

valuation anomalies for interconnector transmission rights whilst the acquisition of physical transmission interconnector rights between two or more electricity markets can be structured as spread options on the spot prices of electricity between connected markets empirical evidence suggests that actual prices may be quite different this raises issues for the valuation of transmission rights particularly in the european context of market harmonisation and the use of transmission rights with increasing levels of wind penetration we examine the price differentials between the irish and british electricity markets where explicit transmission capacity auctions have been persistently undersubscribed and transmission rights acquired but not fully utilised we find significant empirical indications that auction prices for transmission rights are undervalued against both arbitrage and spread option valuations we also find significant power flows against the efficient price spread direction a survey of a group of experts with an interest in trading power between ireland and britain inform a number of possible explanations for the apparent inefficiencies these include ex post pricing in the irish market intermittent wind and strategic behaviour by dominant firms

a strategic model of european gas supply gasmod abstract this paper presents a model of the european natural gas supply gasmod which is structured as a two stage game of successive natural gas exports to europe upstream market and wholesale trade within europe downstream market and which explicitly includes infrastructure capacities we compare three possible market scenarios cournot competition in both markets perfect competition in both markets and perfect competition in the downstream with cournot competition in the upstream market eu liberalization we find that cournot competition in both markets is the most accurate representation of today s european natural gas market where suppliers at both stages generate a mark up at the expense of the final customer double marginalization our results yield a diversified supply portfolio with newly emerging lng exporters gaining market shares enforcing competition in the european downstream market would lead to lower prices and higher quantities by avoiding the welfare reducing effects of double marginalization binding infrastructure capacity restrictions strongly influence the results and we identify bottlenecks mainly for intra european trade relations whereas transport capacity in the upstream market is globally sufficient in the cournot scenario

parametric model risk and power plant valuation abstract the fact that model and parameter risk are important sources of uncertainty in option pricing models and for risk management procedures has recently been recognised for financial markets see cont 2006 morini 2011 bannor and scherer 2013 in the context of energy markets investment decisions are often based on the valuation of fossil power plants as real options depending on various underlying processes such as the power carbon emission certificate and gas price to capture parametric model risk inherent in the valuation procedure of fossil power plants we use a methodology recently established in bannor and scherer 2013 as gas fired power plants are seen as flexible and low carbon sources of electricity which are important building blocks in terms of the switch to a low carbon energy generation we consider the model risk in this asset class in detail our findings reveal that spike risk is by far the most important source of parametric model risk

wind storage interconnection and the cost of electricity generation abstract we evaluate how increasing wind generation affects wholesale electricity prices balancing payments and the cost of subsidies using the irish single electricity market sem as a test system with hourly data from 1 january 2008 to 28 august 2012 we model the spot market using a system of seemingly unrelated regressions sur where the regressions are the 24 hours of the day wind has a negative impact on the system marginal price with every mwh increase in wind generation equal to about 0 2 of the average wind generation in our sample leading to a decrease of the system marginal price of 0 018 mwh or about 0 3 of its average value we use time series models to analyse the balancing market and show that wind generation increases balancing payments as do the forecast errors of demand and wind every mwh of additional wind generation is associated with an increase in constraint payments of 3 2 or about 0 01 lack of storage increases the impact of wind on balancing payments whereas the lack of interconnection has no effect overall wind decreases costs through its effect on the electricity price more than it increases constraint payments even when storage is on outage the effect of wind remains positive after including the cost of subsidies given to wind generation

journey and impact of business model innovation the case of a social enterprise in the scandinavian electricity retail market abstract organizations such as social enterprises engage in business model innovation when they wish to create deliver and capture value for their various stakeholders in ways that effect positive environmental and social change despite the increasing research attention paid to social enterprises the literature on business model innovation in this context is still scarce therefore the purpose of this paper is to explore business model innovation driven by sustainability issues at a social enterprise operating in the scandinavian electricity retail market a single case study research approach is taken and data are collected from sixteen individual interviews and two focus groups with executives managers and directors the study contributes to business model innovation as an organizational change process as well as an outcome of this process the findings show that business model innovation over time at social enterprises reflects a shift in focus from novelty via lock in of customers to efficiency in internal management routines additionally the study concludes that social enterprises with innovative business models driven by sustainability issues can introduce novel practices that lead to changes in the dominant business model of their industry the study also suggests how social entrepreneurs might innovate their business models as they focus on environmental and social sustainability

regime jumps in electricity prices many countries are liberalizing their energy markets participants in these markets are exposed to market risk due to the characteristics of electricity price dynamics electricity prices are known to be mean reverting very volatile and subject to frequent spikes models that describe the dynamics of electricity prices should incorporate these characteristics in order to capture the price spikes many researchers have introduced stochastic jump processes but we argue and show that this specification might lead to potential problems with specifying the true amount of mean reversion within the process in this paper we propose a regime switching model that models price spikes separated from normal mean reverting prices

an assessment of the danish german cross border auctions abstract this paper presents an analysis of the auction prices at the cross border auction between west denmark and germany and between east denmark and germany the kontek cable monthly and annual transmission capacities appear to be more highly valued than daily transmission capacity on average the two cross border auctions show different trends the auctions between west denmark and germany exhibit a higher level of prices in the southbound direction and between east denmark and germany higher prices in the northbound direction we find a relatively strong correspondence in the pricing of products over different time frames daily monthly and annual auctions between west denmark and germany and a weak correspondence for the products between east denmark and germany in the daily auctions market players can decide whether to use their capacity after the clearing of the day ahead market while in the monthly and annual auctions they must decide whether to use their capacity prior to clearing if they choose not to use their capacity the use it or lose it principle applies the capacity is then subsequently released to the daily market since the daily cross border auctions are free of commitment they should be valued as options likewise in the monthly and annual auctions market players can choose not to nominate their capacity but as this must occur before the clearing of the day ahead market they will not know the directions of the power flows a priori if they nominate the capacity they must use it if the direction turns out to be wrong it is then possible to purchase capacity in the opposite direction in the daily auctions if market players can accurately predict the outcome of the spot markets day ahead the value of monthly and annual capacity should more closely reflect the value of an option thus one would expect the value of the monthly and annual capacity to be between the value of an option and an obligation although this suggests that the average price of daily capacity should be greater than monthly and annual capacity our data do not support this hypothesis the daily monthly and annual capacity auctions do not reflect the value of the underlying asset as specified by the appropriate valuation of the energy price differentials between west denmark and germany and east denmark and germany therefore market players are exposed to substantial variation in fees for congestion management on the cross border we study whether arbitrage improves over time and discern no obvious trend since the explicit auction procedure has not been cost efficient a better approach appears to be the new market coupling arrangement introduced on the kontek cable and on the border between west denmark and germany with the result that market players will pay a congestion management fee i e area price difference equal to the energy price differential resulting from the market coupling mechanism

third degree price discrimination and consumer surplus this paper considers the effects of monopoly third degree price discrimination on aggregate consumer surplus discrimination is likely to reduce surplus relative to that obtained with a uniform price but surplus can rise under reasonable conditions if the ratio of the pass through coefficient to the price elasticity at the uniform price is higher in the market with the higher price elasticity then surplus is larger with discrimination for a large set of demand functions the relatively high pass through coefficient implies a large price reduction in this market with logit demand functions surplus is higher with discrimination if pass through is above 0 5

ideas institutions and interests in the politics of cross border electricity interconnection greenlink britain and ireland abstract increasing electricity interconnection is necessary for both closer market integration and facilitating more renewable generation across the european union however progress on the ground has been slow this paper adds to the literature on the politics of interconnection through a case study of a proposed link between ireland and great britain we analyse how the institutional setting for investment has evolved at eu and member state level and how the influence of stakeholders is mediated by the ability of actors to define their interests and by institutional points of entry using this framework we examine the greenwire greenlink project we find first that developments in the institutional context especially the adoption of a new cap and floor regime for merchant investment by the gb regulator have had both positive and negative impacts on the project second we find that regulators and governments in the two markets have found it hard to define their interests in the project and its net social benefit due to informational complexities and changes in information over time third the project has met with local public opposition that is strong but which has little leverage due to a lack of institutional entry points

a 100 year review of electricity policy in ireland 1916 2015 abstract over the past century ireland s electricity sector has undergone a significant transformation this paper documents the nation s struggle to build an electricity system to improve security of electricity supply through portfolio diversification and to promote indigenous energy sources this was a challenge for an electrically isolated island with little natural resources the paper also identifies the ineffective policy decisions that left ireland exposed to the 1970s energy crises the crises did however provide a clear impetus for focusing irish energy policy going forward the successful deployment and integration of large scale wind power was due to strong national and supranational policy decisions in 2015 ireland had the third highest wind energy share of national electricity demand 22 8 of all iea wind member countries the paper also traces ireland s transition through market reform regional fragmentation and looks onwards to the eu internal market for electricity in essence this paper provides a holistic view of the implications of various policy decisions on the electricity sector along with the stresses of external factors on the electricity market and should be useful for policy makers elsewhere faced with similar decisions

implicit auctioning on the kontek cable third time lucky implicit auctioning in europe is about eliminating cross border trade inefficiencies by internalizing crossborder trade into the day ahead auction procedures of the power exchanges that are already organizing trade nationally on the kontek cable implicit auctioning has first been implemented with no coupling between the relevant power exchanges followed by a volume coupling implementation and finally a one way price coupling implementation that is still operational today the main contribution of this paper is to compare the theoretical properties of these three implementations and to analyze their performance empirically we find that the third implementation is significantly outperforming the previous two implementations but in this third implementation stakeholders partly abandoned the volume coupling approach they initially believed to be a viable alternative and institutionally easier to implement

from micro to macro via production networks amodern economy is an intricately linked web of specialized production units each relying on the flow of inputs from their suppliers to produce their own output which in turn is routed towards other downstream units in this essay i argue that the structure of this production network is key in determining whether and how microeconomic shocks affecting only a particular firm or technology along the chain propagate throughout the economy and shape aggregate outcomes therefore understanding the structure of this production network can better inform both academics on the origins of aggregate fluctuations and policy makers on how to prepare for and recover from adverse shocks that disrupt these production chains two recent events have brought to the forefront the importance of interconnections between firms and sectors in aggregate economic performance consider first the 2011 earthquake in japan while the triple tragedy of the earthquake the ensuing tsunami and the near nuclear meltdown at fukushima surely resulted in a significant destruction of human and physical capital its effects would have been largely restricted to the affected areas were it not for the disruption of national

degrowth and techno business model innovation the case of riversimple there is an emergent understanding that humanity has precipitated an anthropocene such that we are now operating in a reduced space for humanity in which urgent action is required this case study paper links degrowth technological innovation business model innovation and corporate governance the arguments are illustrated with the case of an embryonic vehicle and mobility business called riversimple the paper shows that radical technology innovations in the vehicle itself are achieved by underlying principles that focus on mass decompounding powertrain de coupling whole system design and low volume production systems the characteristics of the technologies are fundamental to and in part derive from the business model adopted by the case and the governance structures designed to avoid the primacy usually afforded to returns to financial shareholders while the case is embryonic the paper argues that an important possible contribution is the ability to commence a disruptive transition to a degrowth future from within existing legal frameworks social practices cultural expectations and physical infrastructures

how much should we pay for interconnecting electricity markets a real options approach abstract an interconnector is an asset that gives the owner the option to transmit electricity between two locations in financial terms the value of an interconnector is the same as a strip of real options written on the spread between power prices in two markets we model the spread based on a seasonal trend mean reverting gaussian process and mean reverting jump process and express the value of these real options in closed form the valuation tool is applied to five pairs of european neighboring markets to value a hypothetical one year lease of the interconnector using different assumptions about the seasonal component of the spread and different liquidity caps which proxy for the depth of the interconnected power markets we derive no arbitrage lower bounds for the value of the interconnector in terms of electricity futures contract and find that depending on the depth of the market the jumps in the spread can account for between 1 and 40 of the total value of the interconnector the two markets where an interconnector would be most resp least valuable are germany and the netherlands resp france and germany finally we provide rules of thumb to interpret the different interconnector values