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| 1 |
ID:
176665
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| Summary/Abstract |
The Colombian short-term electricity market is characterised by a single settlement and by the clearing of a single national hourly spot price for the entire grid. This price is computed ex post, based on the real-time operation of the system. In the day ahead, there is only an operational dispatch, which does not set any binding economic commitment. A deviation from such dispatch (due, for instance, to an outage), if it is informed in advance, has no economic consequence for market agents. As recognised by Colombian regulatory institutions, this design is not suitable to efficiently integrate large shares of variable renewable resources.
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| 2 |
ID:
171391
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| Summary/Abstract |
Electricity subsidies in developing countries have always been debated in economics circles. Despite their popular appeal of providing relief to the poor, the research has proven otherwise. They increase the magnitude of deadweight loss and taper consumer welfare. However, complete withdrawal of a subsidy will make electricity unaffordable for the underprivileged. Therefore, in the context of developing countries, there is a need to determine the optimal level of subsidy, which will have the least economic impact and benefit the maximum number of users. Pakistan has been marred by deep energy crises and the government is forced to provide very large subsidies for electricity. Using Pakistan as a case study, this study uses a uniform and non-uniform price increase to determine the optimal level of electricity subsidies. This study employs a micro-model technique for the calculation of deadweight and welfare losses when the price of electricity is increased uniformly or non-uniformly across different consumption groups. This study also introduces a targeted subsidy approach for curbing the mounting deadweight loss due to immense electricity subsidies. Our research has identified that the targeted subsidy approach not only generates fiscal savings but also improves the welfare of the vulnerable in society.
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