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ID:
125445
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| Publication |
2013.
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| Summary/Abstract |
In the course of European efforts to mitigate global warming, the application of carbon dioxide capture and storage (CCS) technologies is discussed as a potential option. Some political opposition was raised - inter alia - by uncertainties about the effective cost of such technologies. Because of the cost structure of CCS power plants with high 'flat' investment cost and - in case of high carbon allowance prices - comparable low variable cost, the application of CCS will induce a merit-order effect causing a decline in wholesale electricity prices on the spot market. On the one hand, the reduction of electricity supply cost raises suppliers' rents, while the decline of wholesale electricity prices augments consumers' surpluses. These positive welfare effects tend to mitigate political opposition against CCS. On the other hand, the merit-order effect reduces electricity suppliers' revenues as the wholesale prices decline. This mitigates their scope for additional investments in CCS capacity. In this study, we focus on the influence of CCS in Germany on electricity supplier and consumer surpluses and associated impacts on the scope for investments in additional CCS capacity. By means of the applied model of electricity markets, influences on European electricity exchange and welfare levels are investigated.
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| 2 |
ID:
137684
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| Summary/Abstract |
Italy promoted one of the most generous renewable support schemes worldwide which resulted in a high increase of solar power generation. We analyze the Italian day-ahead wholesale electricity market, finding empirical evidence of the merit-order effect. Over the period 2005–2013 an increase of 1 GWh in the hourly average of daily production from solar and wind sources has, on average, reduced wholesale electricity prices by respectively 2.3€/MWh and 4.2€/MWh and has amplified their volatility. The impact on prices has decreased over time in correspondence with the increase in solar and wind electricity production. We estimate that, over the period 2009–2013, solar production has generated higher monetary savings than wind production, mainly because the former is more prominent than the latter. However, in the solar case, monetary savings are not sufficient to compensate the cost of the related supporting schemes which are entirely internalized within end-user tariffs, causing a reduction of the consumer surplus, while the opposite occurs in the case of wind.
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