European Electricity Market Research Articles

Energy systems and the climate dilemma: Reflecting the impact on CO 2 emissions by reconstructing regional energy systems

Global warming is one of the most important environmental issues today. One step for the European Union to fulfil the Kyoto protocol, stating a worldwide decrease of emissions of greenhouse gases, is to treat the environment as a scarce resource by attributing costs for environmental impact. This accompanied with considering the European electricity market as one common market, where coal condensing power is the marginal production, lead to the possibility to reduce CO 2-emissions in Europe by reconstructing energy systems at a local scale in Sweden. A regional energy system model is used to study possibilities to replace electricity and fossil fuel used for heating with biomass and how a reconstruction can affect the emissions of CO 2. An economic approach is used where cost-effective technical measures are analysed using present conditions and by including monetary values of externalities. The analysis shows that, by acting economically rational, a large amount of electricity and fossil fuel should, in three out of four cases, be replaced leading to a substantial reduction of CO 2 emissions.

Towards a Common European Electricity Market

This paper analyses the future organization of cross border trade in the European electricity market. The draft Regulation “on Conditions for Access to the Network for Cross-Border Exchanges in Electricity” issued in March 2001 by the European Commission together with related documents produced by the European association of Transmission System Operators (ETSO) and the Council of European Electricity Regulators (CEER) constitute the backbone of this analysis. The paper examines whether the economic principles contained in these documents suffice to design a working European electricity market and if not, what is missing. It concludes that these principles need to be completed by harder measures in order to induce the “real integrated single market” of electricity claimed by the Commission. In short, the principles may be necessary, but they are unlikely to be sufficient.

Project financing consequences on cogeneration: industrial plant and municipal utility co-operation in Sweden

The liberalisation of the European electricity market influences investment decisions in combined heat and power plants. Energy companies modify their business strategies and their criteria for investments in power generation capacity. In this paper, the gains from a co-operation between a paper mill and municipal utility are studied. We find that a widened system boundary, including both the industrial plant and the district heating company, increases cost-effectiveness by 7–11%, compared to a situation with two separately optimised systems. Furthermore, optimal investments are strongly influenced by the actors’ different required returns. With a relatively low required rate of return on energy investments, typical for a municipally owned utility, the most profitable investment is a wood chips-fuelled cogeneration plant. With a higher rate of return on capital, typical for a competitive industry, the optimal investment is mainly a heat-only steam boiler. Finally, some general influences on required rate of return caused by electricity market deregulation are observed. Whilst tending to increase companies’ required returns, deregulation may, besides extending the outlet for locally generated electricity, also obstruct long-term high-cost investments such as cogeneration based on conventional technology.

Green certificate trading in the Netherlands in the prospect of the European electricity market

The support system for green electricity in the Netherlands has been one of the most complex and complicated systems across Europe. A voluntary trade of green certificates—or green labels—was one of the schemes used in the policy models of the 1990s. The liberalization of the electricity market has attracted substantial changes in the degree and nature of commitment by energy companies and political authorities for renewable electricity. In 2001, a new mechanism for the voluntary trade of green certificates has become operational, replacing the green label trade system one terminated in the end of 2000. This paper presents the two systems of green certificates’ trade developed in the Netherlands and discusses their market stimulation potential in the very different economic and industrial circumstances that has surrounded each of them. The paper argues for a need to enable a support system that reduces investment risks as much as possible, and removes the residual, but still strong, institutional, administrative and social barriers for renewables’ deployment. But before this, a clear governmental vision on the role of renewables in current energy supply systems is first needed, backed by a coherent policy and sufficient support along the economic dimension of renewables’ market diffusion.

An integrated simulation model for European electricity and natural gas supply

This paper describes an empirical long-run simulation model for the European electricity and natural gas market. In a first step, electricity and gas markets are modelled separately by dynamic linear programming. In a second step, the models are linked by iteration. The model results show significant interrelationships between gas consumption in power generation and supply conditions on the gas market.

Competition in Liberalized European Electricity Markets

A new directive has introduced competition to the previously closed and tightly regulated European electricity markets. This creates major opportunities, as well as challenges, for both incumbents and new entrants.

Ranking factors of an investment in cogeneration: Sensitivity analysis ranking the technical and economical factors

A deregulation of the electricity market in Europe will result in increased competition among the power-producing companies. They will therefore carefully estimate the financial risk in an investment in new power-producing capability. One part of the risk assessment is to perform a sensitivity analysis. This paper presents a sensitivity analysis using factorial design, resulting in an assessment of the most important technical and economical factors affecting an investment in a gas turbine combined cycle and a steam cycle fired by woodchips. The study is performed using a simulation model that optimizes the operation of existing power plants and potential new investments to fulfil the desired heat demand. The local utility system analysed is a Swedish district heating system with 655 GWh y−1 heat demand. The conclusion is that to understand which of the technical and economical factors affect the investment, it is not sufficient to investigate the parameters of the studied plant, but also the parameters related to the competing plants. Both the individual effects of the factors and the effect of their interaction should be investigated. For the energy system studied the price of natural gas, price of woodchips and investment cost have the major influence on the profitability of the investment. Copyright © 2001 John Wiley & Sons, Ltd.

THE ENGLAND AND WALES NON-FOSSIL FUEL OBLIGATION: History and Lessons

▪ Abstract The first phase of promoting renewable energy in Europe is coming to an end. The timetable of the European Commission's Single Electricity Market (SEM) Directive has been the key recent driver of change within European energy and electricity markets. As mainland European countries have been forced to restructure their electricity industries and reappraise their renewable energy policies, they have been impressed by the results of the England and Wales Renewable Non-Fossil Fuel Obligation (NFFO). The NFFO is a mechanism for promoting renewable energy that has a competitive basis. However, the United Kingdom is in the process of creating a new policy. As new renewable energy policies have been discussed or put in place in mainland European countries, so these have influenced those of the United Kingdom. Renewable energy policies throughout Europe are converging. This paper analyzes the history behind these changes and underlines the lessons to be learned.

Emergence of financial markets for electricity: a European perspective

Deregulation directed at European energy markets is proceeding, although the speed often may seem slow. Real changes are coming in the development of physical and especially financial markets for electricity. Electricity deregulation started in individual countries, notably the United Kingdom and Norway, and the Norwegian effort spread to the rest of the Nordic region before the Union's 1996 Electricity Directive started to have a real impact. Electricity deregulation is a complicated process, involving breaking up of generation monopolies, unbundling of generation and transmission, consumer choice of suppliers through local distributors, and eventually perhaps the establishment of a power pool, where physical as well as financial contracts are traded. The deregulation process now has gone far enough to reap some experiences. The original UK deregulation model, which focused mainly on breaking up the generation monopoly, proved somewhat inefficient because it didn’t offer real consumer choices and opened for inefficient gaming strategies among producers. This experience has pushed the United Kingdom in the direction of the Nordic model. Norwegian deregulation is peculiar in the sense that new entry to generation is highly restricted. On the other hand, Norway — now with the entire Nordic region — has developed a quite advanced and quite well-functioning electricity trading pool, with widespread financial trading and good liquidity. Part of the success of the Nordic model comes having a high-quality spot price which can be used as a benchmark for the pricing of financial contracts. Another possible source of success is the high proportion of hydropower, for which production volumes can be adjusted quickly and outages and price spikes thus avoided. The Swiss experience further underscores the importance of a spot-price benchmark, because the extensive Swiss physical trade has allowed a growing volume of contract trade even in the absence of deregulation. From these experiences we propose four factors we believe to be instrumental in creating healthy financial power markets. The choice of pool model, including spot, adjustment and forward markets, will make or break liquidity. A price index is essential for ensuring transparency. Standardized, simple derivative contracts make trading easier and more attractive. Finally, the underlying physical system is important: a hydro-based system is easy to adjust, while a thermal system will have problems with security of supply. Although the process is slow, deregulation is likely to change the European electricity market in profound ways. We see the effects mostly as beneficial. Deregulation will improve efficiency in generation, will improve transparency for better consumer choices, and allow the emergence of efficient financial trade in electricity. If deregulation is all that's done, the environmental effects may be adverse because lower prices encourage greater consumption and hence emissions. Coupled with a sensible environmental policy, we believe deregulated markets can minimize the costs of environmental protection.

The European Electricity Market Enters the New Millennium

Rappel des principales caracteristiques du secteur electrique de l'Union Europeenne, en 1999. Etude de la liberalisation du marche de l'electricite, des differentes etapes du processus et des obstacles.

The European Electricity Market Enters the New Millennium

Rappel des principales caracteristiques du secteur electrique de l'Union Europeenne, en 1999. Etude de la liberalisation du marche de l'electricite, des differentes etapes du processus et des obstacles.

Overview of the EU electricity directive

In this paper, the authors present an overview of the European Union internal electricity market directive, which establishes common standards for the generation, transmission and distribution of electricity.

99/01399 Ammonia-water power cycles for direct-fired cogeneration applications : Dejfors, C. et al. Energy Convers. Manage., 1998, 39, (16–18), 1675–1681

99/01399 Ammonia-water power cycles for direct-fired cogeneration applications : Dejfors, C. et al. Energy Convers. Manage., 1998, 39, (16–18), 1675–1681

Effects of a European electricity market on the German electricity industry: results from a simulation model of the European power systems

The introduction of an European common market for electricity and the opening of the power markets to eastern Europe and Scandinavia will have a drastic and lasting effect on the structure of the German electricity industry. This paper presents an evaluation of the possible effects of a single market especially on the power trade within Europe and the German power plant system. One special aspect is the investigation, whether a flooding of the German electricity market with French nuclear power could happen. Scenario simulations reject the argumentation that a European common market for electricity would lead to a dramatic increase in international electricity trade.

Building Core Competencies in Crisis Management Through Organizational Learning: The Case of the French Nuclear Power Producer

Drawing from the resource-based theory of the firm, we develop a conceptual framework to show how organizational learning helps companies build a set of embedded knowledge assets (core competencies). The evolution of the core competencies over time depends on the ability of the firm to maintain a high level of organizational learning. In this article, we take the case of the French nuclear industry to illustrate how the most powerful French electricity producer and supplier, EDF, had succeeded, for 20 years, in building a core competence in nuclear risk and crisis management. Referring to the future deregulation of the European electricity market and the fierce competition of substitute resources of energy, the article shows that nuclear safety is a crucial issue for the survival of EDF and the European nuclear industry. We explore how EDF has learned from Three Mile Island in 1979 and Chernobyl in 1986 to improve and enrich continuously its core competence in risk and crisis management. We distinguished three phases in the learning process of EDF: the technical phase (1977–1982), the human phase (1982–1989), and the cultural phase (1989–1995). Each phase is analyzed as a step toward a greater awareness of the multidimensional nature of risk and crisis management.

Computable Equilibrium Models and the Restructuring of the European Electricity and Gas Markets

More regulation, not less, is temporarily necessary, if effective, competition is to be established in network industries. This paradox places new requirements on computable models: they should provide realistic descriptions of technologies but also of markets and institutions. Industrial economics and computation of economic equilibrium can help achieve this dual requirement. This paper discusses their potential in the context of the deregulation of the European gas and electricity sectors. Some key elements of the European legislative process are first presented in order to point out the diversity of institutions that can emerge and to highlight the need to model institutions. Perfect competition equilibrium models although institutionally poor are argued to be useful for ex post analysis. Applications of the standard Cournot and' Bertrand paradigms in ex ante analysis of gas and electricity markets are reviewed next. Models combining market power and externalities are then discussed with reference to electricity restructuring. Finally multistage equilibrium models are introduced in the context of investment in gas and electricity. Computation remarks conclude the paper.

97/03861 A normative structure for the European electricity market

97/03861 A normative structure for the European electricity market

A normative structure for the European electricity market

A normative structure for the European electricity industry is discussed. This model builds upon proposals and experiences in several European nations (in particular the Netherlands and the UK). Two rivalling structures (vertical integration versus open competition) are compared. Our ‘open structure’ is specific in not allowing TPA (third party access) to the grid, and in making the necessary distinction among ‘independent generators’ and Independent Generators of Own Power IGOPS. Cost economies (scale, scope and density) are related to the three major functions of a power system (generation, transport, distribution). The performance of the rival models is assessed for five criteria: sustainability, economic efficiency, regulatory efficiency, equity, and institutional feasibility.

95/03709 Liberalization and environmental policy in the European electricity market

In July 1996, Kodak released new film-screen systems with enhanced contrast (EC) for portal localization with megavoltage therapeutic beams. This study presents the generation of general-purpose technique charts for Kodak’s new film-screen combinations: the Enhanced-Contrast localization (EC-L) film in EC-L cassette and the EC-L film in fast ECL (fECL) cassette for use with cobalt-60, 6 MV, 10 MV, and 18 MV beams. These technique charts were based on the assumption that a film with an optical density (OD) of 1.8 provides the best viewing density. The doses to produce such as OD, Dexp, were obtained from the H & D curves and were 1.5, 1.6, 1.7, and 1.8 cGy for cobalt-60, 6 MV, 10 MV, and 18 MV beams, respectively, with the EC-L-film+EC-L-cassette combination. The corresponding values were 1.3, 1.3, 1.3, and 1.4 cGy, respectively, for the above four beams with the EC-L-film+fEC-L-cassette combination. The dose to the film is assumed to be proportional to the calibrated dose rate (D0), field size factor (FSF), inverse square factor relative to 100.0 cm (INV), and the transmission factor through the patient, which is equal to e−uT, where u is the broad beam attenuation coefficient and T is the patient thickness. With the above assumptions, the exposure time or monitor unit, t, is then calculated from the following equation: t = Dexp/(D0∗FSF∗INV∗e−uT). For an average port size of 15 × 15 cm, the attenuation coefficients were obtained from the fitting of TAR (cobalt-60) or TMR (6 MV, 10 MV, and 18 MV) as a function of depth from 10 to 30 cm and were 0.0564 cm−1, 0.03714 cm−1, and 0.02271 cm−1 for cobalt-60, 6 MV, 10 MV, and 18 MV beams, respectively. The FSF were explicitly obtained from the clinical physics data books and were 1.028, 1.032, 1.036, and 1.053 for cobalt-60, 6 MV, 10 MV, and 18 MV, respectively. For cobalt-60 beam, the D0 was assumed to be 100.0 cGy/min. For the 6 MV, 10 MV, and 18 MV beams, the D0 in cGy per monitor unit is 1.030, 1.051, and 1.061, respectively. Technique charts were then generated as a function of patient thickness from 10 to 45 cm for filming distance from 110 to 140 cm for all four beams. These technique charts can be easily customized to portal localization practices in a radiation therapy department.

Liberalization and Environmental Policy in the European Electricity Market

This paper deals with the environmental aspects of the electricity industry in the European Union against the background of the recent proposals for the liberalization of the European electricity market. These proposals, as well as the main features of the power industry in the EU member states, are discussed. Existing and planned environ~mental policies for the electricity sector are considered. It is concluded that liberalization as such is not a threat to the environment, and may even create better competitive opportunities for environmentally friendly ways of generating electricity. However, liberalization will have to be accompanied by regulations, incentives and the provision of information in order to stimulate energy saving, 'cleaner' power generation and renewabIes.