Rising Electricity Prices Research Articles

Electricity markets in transition: Market distortions associated with retail price controls

In many jurisdictions, there are growing concerns over rising electricity prices and increased price volatility due in part to aging network infrastructure, retiring generation capacity, and subsidies to promote investment in renewables. In response, policymakers have advocated for or implemented retail price controls. Yet these can foster distortions that do not directly address market failures. We discuss alternative policies that can be used to mitigate these price effects.

The Effect of Electricity Prices on Residential Solar Photovoltaic Panel Adoption: Fukushima as a Natural Experiment

There are a range of private financial benefits of residential solar photovoltaic (PV) installation, such as a reduced electricity bill, tax incentives and a feed-in tariff for generated electricity. To empirically analyze how rising electricity prices affect household adoption decisions, we use the 2011 Fukushima nuclear disaster as a natural experiment. The shutdown of nuclear power plants across Japan led to a sizable increase in electricity prices that varied by region, allowing us to identify the effect of electricity prices on household PV system adoption. We find that higher electricity prices are significantly more influential on PV adoption on existing homes than on newly-built homes. Our estimated electricity price elasticity of PV systems ranges from 0.9 to 1.2 for existing homes and is much smaller and statistically insignificant for newly-built homes. We discuss behavioral mechanisms explaining this difference and implications for policies stimulating residential adoption of renewables.

Disruptive forces on the electricity industry: A changing landscape for utilities

The energy sector has been navigating rapid technology innovation, slowing demand, and rising electricity prices. A steady shift towards renewable energy products is also exacerbating the disruption of utility business models. This article outlines the drivers of disruption for electricity utilities, and explores potential risks and opportunities should traditional business models evolve to embrace innovative technologies going forward.

German energy policy and the way to sustainability: Five controversial issues in the debate on the “Energiewende”

German governments throughout the last 25 years have accepted the sustainability paradigm und put forth an energy policy that supports the development of renewable energies, the reduction of greenhouse gas emissions and the improvement of energy efficiency. Together with the process of seeking to phase out nuclear power, these objectives constitute the ‘Energiewende’ (energy transition) the Energiewende has reached a level that reveals its challenges and thus makes it a valuable case study. Based on a multi-method stakeholder analysis, frequently debated controversial issues related to the Energiewende have been identified and will be confronted with “reality” in this paper. The set of controversial issues includes the following five aspects: security of electricity supply, rising electricity prices for industry and commerce, rising electricity prices for consumers, impacts of the energy transition on employment, and the effects of the politically instigated speed of the Energiewende on its practical implementation.

Energy and climate hand-in-hand: Financing RES-E support with carbon revenues

In Italy, the cost of support for renewable electricity (RES-E) is largely recovered through the “A3 surcharge”, which weighs heavily on electricity bills. Using household survey data, we show the A3 surcharge is markedly regressive. Carbon taxation in the non-ETS sector is envisaged as a means to reduce CO2 emissions cost-effectively and generate revenue to lower the A3 surcharge. A non-ETS carbon tax would be less regressive than the A3 surcharge and its cost would be more evenly distributed across households. We calculate the revenue of a €20/tCO2 non-ETS carbon tax would have allowed a cut in the A3 surcharge of about 68% in 2011, and 39% in 2012. The impact of the carbon tax plus the reduced A3 surcharge would have been less regressive, but the cost higher for most households. The restrictions imposed in the simulations mean the results are only appropriate to render first-round effects of the reform. Policy relevanceIn the vast majority of the EU Member States, the cost of RES-E support is largely paid by electricity consumers, most often through specific surcharges. Rising electricity prices are a common concern given the implications for competitiveness and equity. The Member States facing this issue could conveniently address it through environmental tax reforms consistent with the Climate and Energy Package. Replacing RES-E surcharges with carbon taxes in the non-ETS sector would permit cost-effective reduction of CO2 emissions while allocating the cost of RES-E support more equitably. The difference in regressivity would stem from the different consumption patterns of home fuels (including electricity) and motor fuels across income distribution. A cross-country comparison of energy household budget shares proves the structural nature of this difference between home fuels and motor fuels. Moreover, the notion that electricity consumers should pay for RES-E support is questioned on the grounds that electricity is a basic necessity good and RES-E support is a means of providing public goods, notably energy security and climate protection.

Firm-level determinants of energy and carbon intensity in China

In recent years, China׳s leaders have sought to coordinate official energy intensity reduction targets with new targets for carbon dioxide (CO2) intensity reduction. The Eleventh Five-Year Plan (2006–2010) included for the first time a binding target for energy intensity, while a binding target for CO2 intensity was included later in the Twelfth Five-Year Plan (2011–2015). Using panel data for a sample of industrial firms in China covering 2005 to 2009, we investigate the drivers of energy intensity reduction (measured in terms of direct primary energy use and electricity use) and associated CO2 intensity reduction. Rising electricity prices were associated with decreases in electricity intensity and increases in primary energy intensity, consistent with a substitution effect. Overall, we find that energy intensity reduction by industrial firms during the Eleventh Five-Year Plan translated into more than proportional CO2 intensity reduction because reducing coal use—in direct industrial use as well as in the power sector—was a dominant abatement strategy. If similar dynamics characterize the Twelfth Five-Year Plan (2011–2015), the national 17 percent CO2 intensity reduction target may not be difficult to meet—and the 16 percent energy intensity reduction target may result in significantly greater CO2 intensity reduction.

Time and tide wait for no man pioneers and laggards in the deployment of CCS

In Europe the ambitions of individual countries to deploy carbon capture and storage (CCS) technologies are diverse. Reasons for this are, amongst other things, the heterogeneity of national electricity generation systems and storage capacities and the differences in the public perception of these technologies. In this analysis we investigate the consequences of partial deployment of CCS, i.e. we consider a situation where some European countries (the “pioneers”) actively deploy CCS technologies, while others (the “laggards”) do not use CCS. Our study focuses on the question whether it pays throughout to be a pioneer and whether laggards will generally be disadvantaged. In our assessment, we take into account impacts on consumers affected from rising electricity prices, electricity suppliers whose profits are influenced by changes in both electricity prices and sales, and international trade-flow changes (modifications in European electricity import/export patterns).

The ‘Green Economy’: A Just and Sustainable Development Path or a ‘Wolf in Sheep’s Clothing’?

This article argues that a transformative model of the green economy could potentially benefit labour and provide an alternative, socially just and ecologically sustainable development path in South Africa. However, realizing this potential depends on an effective challenge to the 'corporate capture' of the green economy discourse. This could emerge from the deepening of an embryonic alliance between the labour and environmental movements. While historically relations between the two movements in South Africa have been disconnected – and even antagonistic – attempts by unions to formulate environmental policies and joint action on two issues, 'climate jobs' and rising electricity prices, are challenging the 'jobs-versus-the-environment' binary and creating new solidarity networks which are promoting radical alternatives.

Dismantling a Competitive Retail Electricity Market: Residential Market Reforms in Great Britain

By 2008 Great Britain had one of the most competitive residential electricity markets in the world, with high levels of consumer engagement and competitive retail margins. However rising electricity prices, driven by international gas price rises, have led to a series of increasingly misguided regulatory interventions which are reducing competition, driving up prices, and undermining political support for a competitive residential energy market.

Towards Synthesizing Energy-efficient Controllers for Modern Production Systems from Scenario-based Specifications

Abstract Due to continuously rising electricity prices, the energy efficiency of production systems is an increasingly important factor in industrial manufacturing. One goal is therefore to reuse the braking energy of manipulator axes. The acceleration and deceleration phases of axes must be synchronized such that, ideally, the braking energy can be reused immediately within the system. In our current technique for the energy-efficient motion planning of concurrent movements of axes, we do not yet consider changing the discrete control logic to reorder movement sequences. This is difficult, since this reordering must not violate critical system requirements. In this paper, we outline a new technique for automatically synthesizing energy-efficient discrete controllers from a scenario-based specification of a production system, which we enrich with information about consumed and generated energy. Last, we provide an outlook on challenging open research problems.

Briefing: Options in water and waste?

In the last 15 years rising levels of landfill tax have accelerated technology investment in higher added value chains in the treatment of waste. In the case of biogenic arisings boundaries between ’waste’ and water sectors are becoming blurred. Actors in both sectors see opportunities for biogenic arisings to be converted to electricity. This is accentuated by expectations of rising electricity prices in the UK and may herald a need to review whether sewerage treatment is best regulated as part of the waste rather than the water sector.

The limited effect of EU emissions trading on corporate climate strategies: Comparison of a Swedish and a Norwegian pulp and paper company

This article examines to what extent and how the EU ETS has influenced the climate strategies of two Nordic pulp and paper companies: Swedish SCA and Norwegian Norske Skog. Rising electricity prices are perceived to be the greatest effect of the scheme. The EU ETS has served to reinforce commitments to improve energy efficiency and reduce CO2 emissions in both companies studied. Procedures like monitoring of CO2 emissions and accounting for CO2 prices have become more significant since the introduction of the EU ETS, but the scheme has not triggered a search for innovative, low-carbon solutions. Due to differences in market factors and production factors, SCA has been more active than Norske Skog in investing in and implementing CO2-lean actions. Future studies of climate-mitigation activities, strategies and innovations in the pulp and paper industry should involve more in-depth investigation of the interactions between such factors and the EU ETS.

Carbon Leakage in the Primary Aluminium Sector: What Evidence after 6.5 Years of the EU ETS?

This paper provides an econometric analysis of the evidence of carbon leakage from the European primary aluminium industry during the first 6 Ω yea rs of the EU ETS. The findings suggest that while rising electricity prices have played a critical ro le in reducing the competitiveness of EU primary aluminium smelting in recent years, no evidence of carbon leakage can be detected so far. Other factors, including rising primary energy prices and changes in EU competition law regarding long term contracts, appear to be more important factors explaining the rise in net imports of primary aluminium and the gradual closure of a number of European primary smelters during the past 6 Ω years. Our results suggest that the carbon leakage debate in this sector may therefore be better seen in terms of not accelerating the decline of the indust ry in Europe, rather than preventing it, and that a ny state-aid to the industry to prevent carbon leakage should therefore be applied accordingly.

A new form of energy poverty is the hallmark of liberalised electricity sectors

The restructuring of electricity sectors has resulted in households paying significantly higher prices. Some European prices rose by more than 100 per cent between 2000 and 2010. NSW households experienced an 80 per cent increase during the period 2007 to 2012. Growing numbers of low‐income and vulnerable households are spending higher proportions of disposable income on energy bills and, we contend, suffer deprivation and social exclusion as a result. This phenomenon, we posit, is a new form of energy poverty driven by rapidly rising electricity prices which are directly related to electricity sector restructuring. The energy‐impoverished population is estimated at 150 million in Europe, and growing. Policy responses are ineffective and poorly targeted, while Australian policy makers rely on measures which significantly understate electricity price changes. This article explores the prevalence and consequences of the problem of energy poverty and outlines the extent of its occurrence in Australia, the country hailed as an exemplar of electricity sector liberalisation.

Estimating deficit probabilities with price-responsive demand in contract-based electricity markets

Studies that estimate deficit probabilities in hydrothermal systems have generally ignored the response of demand to changing prices, in the belief that such response is largely irrelevant. We show that ignoring the response of demand to prices can lead to substantial over or under estimation of the probability of an energy deficit. To make our point we present an estimation of deficit probabilities in Chile's Central Interconnected System between 2006 and 2010. This period is characterized by tight supply, fast consumption growth and rising electricity prices. When the response of demand to rising prices is acknowledged, forecasted deficit probabilities and marginal costs are shown to be substantially lower.

Reducing industrial energy costs through energy-efficiency measures in a liberalized European electricity market: case study of a Swedish iron foundry

Swedish industry, which has one of the lowest electricity prices in the European Union, will face higher electricity prices due to the Union’s electricity market liberalization. Rising electricity prices, together with a larger use of electricity than other European countries, pose a threat to industrial activity in Sweden. The Swedish foundry industry, with large proportions of energy costs in relation to the added value, is particularly sensitive to higher electricity costs. The aim of this paper is to study the effect of higher electricity prices on the Swedish iron-and-steel foundry industry, quantify an energy efficiency potential for a medium-sized Swedish iron foundry resulting from a thorough industrial energy audit, and investigate what impact they have on the energy cost.

Modelling and simulation of an AFBC steam heating plant using ASPEN/SP

A techno-economic study of the utilization of Eastern Canadian coal in steam production using atmospheric fluidized bed combustion (AFBC) is presented. An industrial-scale AFBC boiler, located at Summerside PEI, Canada, was modelled using the ASPEN/SP (advanced system for process engineering) process simulator. ASPEN/SP heat and material balance predictions were within 10% of plant measurements. A sensitivity analysis showed that the combustion air flowrate has the greatest effect on the predicted carbon burnout. An economic sensitivity analysis shows that the plant's economic viability versus electric heating is extremely sensitive to the price of the electricity. Rising electricity prices make this plant more attractive.

Whatever happened to geniponics?

Premium, plentiful produce that can be grown virtually anywhere year round was the goal in the 1970s of a team of engineers at General Electric's Syracuse, N.Y., facility. A variation on hydroponics-growing plants in nutrient solution rather than soil-Geniponics survived a 1980 sale to Control Data Corp. but went down in 1984 before rising electricity prices. However, similar systems live on in controlled-environment research at numerous universities and research centers.