We decompose the decline in coal production from 2008 to 2016 into the contributions of several sources. In particular, we estimate the effects of declining natural gas prices and the introduction of new environmental regulations along with several other factors, using both monthly state-level data and annual information on coal plant closings. We estimate that the declining price of natural gas relative to coal is responsible for 92 percent of the total decline in coal production over this period and that environmental regulations account for an additional six percent, with other factors making small and offsetting contributions. [ABSTRACT FROM AUTHOR]

Electric power production, Stochastic analysis, Sustainability, Mixed integer linear programming, Electricity, and Fossil fuels

This paper aims to design a sustainable stochastic electricity production network where fossil fuels-based, biomass-based, and co-firing-based production strategies are simultaneously considered in order to take advantage of all the three production strategies. A multi-objective stochastic mixed integer linear programming model is proposed to achieve economic feasibility, as well as environmental and social benefits under multiple uncertainties. The model is solved by using the improved augmented epsilon constraint method. A case study is used to illustrate the effectiveness of the proposed model. Pareto optimal analysis is conducted to understand the trade-off between economic, environmental, and social aspects of sustainability. [ABSTRACT FROM AUTHOR]

Deregulation, Financial leverage, Profit margins, Market share, and Electricity

We examine the relationship between financial leverage, competition, and the strategic behavior of U.S. electricity firms under the dynamic GMM model framework. The GMM provides a framework to address the endogeneity in the leverage-competition relationship. We find that electricity deregulation induces private firms to increase financial leverage. Large and small levered firms exhibit different behaviors under the higher competitive conditions resulting from deregulation exogenous shocks. Highly levered large firms apply aggressive strategies through increasing the investment activities but slightly decreasing their retail prices, resulting in lower profit margins but drastically gaining more market share. On the other hand, small firms with higher leverage follow survival strategies to maintain their customer base at the expense of profit margins by investing more and charging higher prices after deregulation. [ABSTRACT FROM AUTHOR]

Market manipulation, Information asymmetry, Market prices, Market power, Information modeling, and Electricity

Electricity market manipulation enforcement actions have moved from conventional analysis of generator market power in real-time physical markets to material allegations of sustained cross-product price manipulation in forward financial markets. A major challenge is to develop and apply forward market analytical frameworks and models. This task is more difficult than for the real-time market. An adaptation of cross-product manipulation models from cash-settled financial markets provides an existence demonstration under uncertainty and asymmetric information. The implications of this analysis include strong empirical predictions about necessary randomized strategies that are not likely to be observed or sustainable in electricity markets. Absent these randomized strategies and other market imperfections, the means for achieving sustained forward market price manipulation remains unexplained. [ABSTRACT FROM AUTHOR]

Electricity pricing, Energy consumption, Electric power consumption, Households, Panel analysis, and Electricity

Empirical evidence on households' awareness of electricity prices and potentially divergent demand responses to price changes conditional on price knowledge is scant. Using panel data originating from Germany's Residential Energy Consumption Survey (GRECS), we fill this void by employing an instrumental-variable (IV) approach to cope with the endogeneity of the consumers' tariff choice. By additionally exploiting information on the households' knowledge about power prices, we combine the IV approach with an Endogenous Switching Regression Model to estimate price elasticities for two groups of households, finding that only those households that are informed about prices are sensitive to price changes, whereas the electricity demand of uninformed households is entirely price-inelastic. Based on these results, to curb the electricity consumption of the household sector and its environmental impact, we suggest implementing low-cost information measures on a large scale, such as improving the transparency of tariffs, thereby increasing the saliency of prices. [ABSTRACT FROM AUTHOR]

Market prices, Market power, and Electricity

Anecdotal evidence indicates that electricity producers use production failures to disguise strategic reductions of capacity in order to influence prices, but systematic evidence is lacking. We use an instrumental variable approach and data from the Swedish electricity market to examine such behavior. In a market without strategic withholding, reported production failures should not depend directly on the market price. We show that marginal producers in part base their decision to report a failure on prices, which indicates that production failures are a result of economic incentives as well as of technical problems. [ABSTRACT FROM AUTHOR]

Electricity pricing, Electric power production, Marketing literature, and Fossil fuels

The empirical literature on electricity markets has highlighted a strong cointegrating relationship governing the dynamics of electricity and fuel prices. More recently the massive introduction of RES in electricity generation, fostered by generous supporting schemes, has influenced the shape and position of the supply function and consequently the equilibrium prices. We believe that the new competitive scenario may have influenced the fuel-electricity nexus with a different impact in day-ahead and balancing markets. Empirical evidence of the evolving fuels-electricity nexus is shown looking at one Italian zone across two samples characterized by a significant change in the level of RES penetration. We conduct the analysis taking into account both day-ahead and, for the first time, balancing market sessions. Results indicate that fuel prices are much less relevant in determining the dynamics of electricity prices in recent years characterized by high RES penetration. On the contrary, taking into account flexible thermal sources, we show that in the second sample balancing and fuel prices (especially gas) are in a long run equilibrium. [ABSTRACT FROM AUTHOR]

Market power, Markets, Economists, Auctions, Electricity, and Behavior

The transition to a low-carbon power system requires growing the share of generation from (intermittent) renewables while ensuring security of supply. Policymakers and economists increasingly see a capacity mechanism as a way to deal with this challenge. Yet this raises new concerns about the exercise of market power by large players via the capacity auction. We present a new modelling approach that captures such strategic behaviour together with a set of ex ante empirical estimates for the new Irish electricity market design (I-SEM)--in which a single firm controls 44% of generation capacity (excluding wind). We find significant costs of strategic behaviour, even with new entry: In our baseline scenarios, procurement costs in the capacity auction are around 150-400 million EUR (or 40-100%) above the competitive least-cost solution. From a policy perspective, we also examine how market power can be measured and mitigated through auction design. [ABSTRACT FROM AUTHOR]

Industrial productivity, Energy consumption, Environmental regulations, Green marketing, Environmental policy, Industrial energy consumption, and Electricity

This study analyzes the relationship between the energy efficiency and the stringency of environmental and market regulation in the electricity sectors has been analyzed. Using 19 European Union countries (2006--2014), we decomposed the environmental policy stringency index, the OECD regulatory indicators and the total factor productivity growth to highlight the complexity of the relations between electricity sector and regulatory policies. In the first stage we compute the three main components of total factor productivity. These three efficiency measures are used in the second stage to assess the impact of the regulatory policies on the total factor productivity also controlling for spatial effect. Results suggest that market and environmental regulations have not unidirectional impacts on the three components of total factor productivity. Pure and scale efficiency index are negatively affected by sectorial regulation that positively affect the shift of technological frontier. Environmental policy negatively affects the shift of the efficient frontier, but has a positive effect on the scale efficiency. [ABSTRACT FROM AUTHOR]

Economics, Power (Social sciences), Social science research, Electricity, Solar technology, and Science & state

Charities, Merchants, Market power, Storage, Energy storage, and Electricity

Restructuring and liberalisation of the electricity industry creates opportunities for investment in energy storage, which could be undertaken by a profit-maximising merchant storage operator. Because such a firm is concerned solely with maximising its own profit, the resulting storage-investment decision may be socially suboptimal (or detrimental). This paper develops a bi-level model of an imperfectly competitive electricity market. The modelling framework assumes electricity-generation and storage-operations decisions at the lower level and storage investment at the upper level. Our analytical results demonstrate that a relatively high (low) amount of market power in the generation sector leads to low (high) storage-capacity investment by the profit-maximising storage operator relative to a welfare maximiser. This can result in net social welfare losses with a profit-maximising storage operator compared to a no-storage case. Moreover, there are guaranteed to be net social welfare losses with a profit-maximising storage operator if the generation sector is sufficiently competitive. Using a charge on generation ramping between off- and on-peak periods, we induce the profit-maximising storage operator to invest in the same level of storage capacity as the welfare-maximising firm. Such a ramping charge can increase social welfare above the levels that are attained with a welfare-maximising storage operator. [ABSTRACT FROM AUTHOR]

Externalities (Economics), Coal, Co-combustion, Biomass, Electricity, and Duty

This paper analyses the effect of recognizing co-firing coal with biomass as renewable electricity. We provide simulations for the French and German electricity mix. Results indicate that, if co-firing is recognized as a renewable, coal may crowd-out traditional renewables with increased generation and additional investments. Regarding CO2 emissions, we find surges when co-firing is recognized as a renewable. The rise is more significant in Germany due to greater coal capacity. In France, the magnitude depends on the share of nuclear with a lower increase when old nuclear plants are prolonged. Finally, we find that recognizing co-firing as a renewable reduces the overall costs for electricity. We balance the cost saving with the increased social cost from higher CO2 emissions. Results show that the cost saving is lower than the increased carbon cost for society with carbon valuation around 100 Euros/tCO2, except in France when old nuclear plants are not decommissioned. [ABSTRACT FROM AUTHOR]

Empirical research, Data analysis, Electric power consumption, Literature reviews, Electricity, and Secondary analysis

Research Question: This paper presents a review of empirical methods used by authors to determine the influence of different groups of factors that influence households' electricity consumption. Motivation: The question of what drives electricity consumption is very complex and requires a systematic approach in analysis of different theory frameworks and factors. In the literature there are a lot of attempts to classify a huge number of very different factors which can be heterogeneous. The review is built on the existing literature by distinguishing the appropriateness of the usage of different empirical methods for collecting the data on the influence of specific groups of factors. Idea: Based on significant literature review and analysis of different methods used in this field, the aim of this paper is to make a classification of the most important factors which have the highest impact on electricity consumption. The factors have been grouped into four groups by the authors of the paper. Data: The analysis was conducted by reviewing papers dealing with households' electricity consumption published in the international journals. Tools: The systematisation of relevant literature was used for the purpose of determining the most common and proper methods that were used for determination of the influence of different groups of factors on electricity consumption. Findings: As consumer behaviour in the area of electricity consumption often demands the examination of subjective views of consumers, methods such as interviewing, conduction of online/offline surveys, case study and field experiments are commonly used for analysing the influence of cognitive and affective factors, socio-demographic and behavioural. For the analysis of the impact of contextual factors that includes using the large amount of secondary data, statistical and econometric methods are used as the most appropriate ones. Contribution: This paper provides an overview of most appropriate research methods when it comes to examination of the impact of different groups of factors whose influence needs to be empirically proven. [ABSTRACT FROM AUTHOR]