5th session of seminars on research in energy economics at paris-sciences-lettres
Abstract
MARKET DESIGNS AND PUBLIC POLICIES IN THE ELECTRICITY SECTOR: WHICH NECESSITY OF CHANGE UNDER ENERGY TRANSITION POLICIES?
Wednesday June 12 2013, from 16:30 to 18:30
School of Mines Paris Tech
60 boulevard Saint-Michel
75006 Paris
The Seminar on Research in Energy Economics at Paris-Sciences-Lettres is jointly organized by the CERNA, the CGEMP, the Chaire European Electricity Markets, Mines ParisTech and University Paris-Dauphine. It is animated by François LEVEQUE (CERNA et MINES PARIS TECH) and Dominique FINON (Chaire European Electricity Markets, CNRS-CIRED).
The seminar was held in English.
PROGRAMME AND SLIDES
1. Michael POLLITT (EPRG, Cambridge University): The Role of policies in Energy Transition in the electricity sector: Could effective market-based instruments prevent EMR-type package? Presentation
2. Dominique FINON (CIRED-CNRS et Chaire EEM Dauphine): The increasing role of the “Visible Hand” in Electricity Markets: The dilemma between fixing market design’s failures or adopting a new regime
Presentation
Summary of the presentation of Michael Pollitt based upon different papers (see EPRG website)
What has been learned from the recent period of market liberalization in the light of an energy transition to low carbon energy system by 2050? It shall be addressed some important questions of the extent to which liberalised markets can or should be combined with the move towards a low carbon economy. The intention is to evaluate the liberalisation period in its own terms and to place it in a wider historical context. This focus should allow us to draw lessons from both developed and developing countries, in regard to their degree of support for action on mitigating climate change or their relative severity of their likely obligations to do so. It has significantly improved the prospects for competition and innovation, and the quality of policy instruments for environmental emissions control (through the emergence of trading mechanisms). But as the European carbon policy lacks of effectiveness and consistency, governments implement overlapping technology-focused policies which tend to create distortions, as the British EMR reform should do.
Summary of the presentation of Dominique Finon (from two papers)
Decarbonizing the European electricity industry while maintaining security of supply, will require significant investment in both clean generation technologies and fossil-fuel peak- and semi-base load equipment. The ongoing reforms in Europe recognize the need to reduce risk for investors by guaranteeing fixed cost recovery in clean technologies. These reforms question the respective roles of public and market coordination as they give an explicit responsibility to the government, regulator, or system operator to coordinate the investment decisions through a wide range of mechanisms, including technology specific support schemes for clean technologies and capacity mechanisms. We bring together the abundant but very distinct literatures on generation adequacy policies and low carbon technologies support policies. We show their convergence on different issues: the reallocation of risks between generators, consumers, and government depending on the different proposed arrangements; the degree of autonomy given to investors; the self-reinforcing role of these arrangements and the influence of these arrangements on the coordination functions of the energy market. We conclude on the best pace of reforming the market design. Could we escape to a radical approach putting in place a comprehensive and well articulated policy package, or are we condemned to piecemeal improvements evolution which could bring some inconsistencies?
D. Finon (2013) “The transition of the electricity system towards. decarbonization: the need for change in the market regime”. Climate Policy, Vol. 13, No. S01, 131–146.
D.Finon and F. Roques. (2003) “European Electricity Market Reforms: The “Visible Hand” of Public Coordination”. To be published in Economics of Energy and Environmental policies.
