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Application: RES-E Promotion

Application: RES-E Promotion. 1. Policy Background 2. Efficiency Considerations 3. Numerical Framework (ELEC-MR) 4. Policy Analysis. 1. Policy Background. Alternative RES-E Promotion Schemes. Two strategies to promote RES-E in Europe:

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Application: RES-E Promotion

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  1. Application: RES-E Promotion 1. Policy Background 2. Efficiency Considerations 3. Numerical Framework (ELEC-MR) 4. Policy Analysis

  2. 1. Policy Background

  3. Alternative RES-E Promotion Schemes • Two strategies to promote RES-E in Europe: • Feed-in tariff systems with differentiated (technology-specific) subsidies • Quota obligations with trade (TGCs:= tradable green certificates) Feed-in tariffs Green quotas • + Flexibility (easily adjustable) • + Low risk for investors • + Serves additional targets(industrial / regional policy goals) • Demands „well informed“ regulation • Danger of over-funding (rent seeking) • Potentially high excess costs • + Little information requirements • + Efficient de-centralized mechanism • - Risk and uncertainties about futuremarket developments • „Hurdles“ for infant technologies Key question: Price tag for additional objectives than greening of electricity (additional costs of differentiated feed-in)?

  4. 2. Efficiency Considerations

  5. Additional Cost of Diversified Feed-In Uniform feed-in tariff (eq. regional quota) Diversified feed-in tariff

  6. 3. Numerical Framework

  7. ELEC-MR: Basic Model Structure • Static (short-term) representation of EU electricity markets • Cournot competition among EU power companies T Region r Region 2 Industrial demand - Base-load - Peak-Load Region 1 Supply Company 1 Company 2 . . . Company n Industrial demand - Base-load - Peak-Load Supply Company 1 Company 2 . . . Company n Residential demand - Base-load - Peak-load Residential demand - Base-load - Peak-load

  8. ELEC-MR: Parametrization Supply: • 23 countries (EU-25 without Malta and Cyprus) • 1160 power plants • 11 representative technologies • Detailed bottom-up Information on costs • 210 companies Demand: • 23 countries (EU-25 without Malta and Cyprus) • Residential and industrial electricity demand • Load-specific demand pattern (base, peak) • Elastic demand (demand elasticities for 4 segments: industrial-base, industrial-peak, residential-base, residential-peak)

  9. 4. Policy Analysis

  10. Illustrative Policy Scenarios

  11. Results (1): EU Technology Mix

  12. Results (2): RES-E Mix

  13. Results (3): Economic Indicators

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