Economics of Energy and Environmental Policy 

About: Economics of Energy and Environmental Policy is an academic journal published by International Association for Energy Economics. The journal publishes majorly in the area(s): Electricity & Electricity market. It has an ISSN identifier of 2160-5882. Over the lifetime, 214 publications have been published receiving 4546 citations. The journal is also known as: Economics of energy and environmental policy & EEEP.

Capacity Market Fundamentals

Abstract: Electricity capacity markets work in tandem with electricity energy markets to ensure that investors build adequate capacity in line with consumer preferences for reliability. The need for a capacity market stems from several market failures. One particularly notorious problem of electricity markets is low demand flexibility. Most customers are unaware of the real time prices of electricity, have no reason to respond to them, or cannot respond quickly to them, leading to highly price-inelastic demand. This contributes to blackouts in times of scarcity and to the inability of the market to determine the market-clearing prices needed to attract an efficient level and mix of generation capacity. Moreover, the problems caused by this market failure can result in considerable price volatility and market power that would be insignificant if the demand-side of the market were fully functional. Capacity markets are a means to ensure resource adequacy while mitigating other problems caused by the demand side flaws. Our paper describes the basic economics behind the adequacy problem and addresses important challenges and misunderstandings in the process of actually designing capacity markets.

Impacts of intermittent renewables on electricity generation system operation

Abstract: All power generation technologies leave their particular imprint on the power system that they belong to. Wind and solar power have only recently reached significant levels of penetration in some countries, but they are expected to grow much during the next few decades, and contribute substantially to meeting future electricity demand, see e.g. European Commission (2011). Wind, photovoltaic (PV) solar and concentrated solar power (CSP) with no storage have non-controllable variability, partial unpredictability and locational dependency. These attributes make an analysis of their impacts on electricity generation system operation and design particularly interesting. This paper reviews how a strong presence of intermittent renewable generation will change how future power systems are planned, operated and controlled. The change is already noticeable in countries that currently have a large penetration of wind and solar production. The mix of generation technologies, and potentially market rules, will have to adapt to accommodate this presence. Regulatory adjustments might be needed to attract investment in "well adapted" technologies. This paper identifies open issues that deserve further analysis from a technical, economic and regulatory perspective.

Electricity Scarcity Pricing Through Operating Reserves

Abstract: Suppressed prices in real-time markets provide inadequate incentives for both generation investment and active participation by demand bidding. An operating reserve demand curve developed from first principles would improve reliability, support adequate scarcity pricing, and be straightforward to implement within the framework of economic dispatch. This approach would be fully compatible with other market-oriented policies. Better scarcity pricing would also contribute to long-term resource adequacy.

Market and Policy Barriers to Deployment of Energy Storage

Abstract: There has recently been resurgent interest in energy storage, due to a number of developments in the electricity industry. Despite this interest, very little storage, beyond some small demonstration projects, has been deployed recently. While technical issues, such as cost, device efficiency, and other technical characteristics are often listed as barriers to storage, there are a number of non-technical and policy-related issues. This paper surveys some of these main barriers and proposes some potential research and policy steps that can help address them. While the discussion is focused on the United States, a number of the findings and observations may be more broadly applicable.

The Future of Nuclear Power After Fukushima

Abstract: This paper analyzes the impact of the Fukushima accident on the future of nuclear power around the world. We begin with a discussion of the ‘but for’ baseline and the much discussed ‘nuclear renaissance.’ Our pre-Fukushima benchmark for growth in nuclear generation in the U.S. and other developed countries is much more modest than many bullish forecasts of a big renaissance in new capacity may have suggested. For at least the next decade in developed countries, it is composed primarily of life extensions for many existing reactors, modest uprates of existing reactors as their licenses are extended, and modest levels of new construction. The majority of forecasted new construction is centered in China, Russia and the former states of the FSU, India and South Korea. In analyzing the impact of Fukushima, we break the effect down into two categories: the impact on existing plants, and the impact on the construction of new units. In both cases, we argue that the accident at Fukushima will contribute to a reduction in future trends in the expansion of nuclear energy, but at this time these effects appear to be quite modest at the global level.