Regionally Differentiated Network Fees to Affect Incentives for Generation Investment

Journal article
(Original article)


Publication Details

Author(s): Grimm V, Rückel B, Sölch C, Zöttl G
Journal: Energy
Publisher: Elsevier
Publication year: 2019
Volume: 177
Pages range: 487-502
ISSN: 0360-5442
Language: English


Abstract

In this paper we propose an equilibrium model that allows to analyze subsidization schemes to affect locational choices for generation investment in electricity markets. Our framework takes into account generation investment decided by private investors and redispatch as well as network expansion decided by a regulated transmission system operator. In order to take into account the different objectives and decision variables of those agents, our approach uses a bi-level structure. We focus on the case of regionally differentiated network fees which have to be paid by generators (a so called g-component). The resulting investment and production decisions are compared to the outcome of an equilibrium model in the absence of such regionally differentiated investment incentives and to an overall optimal (first-best) benchmark. To illustrate possible economic effects, we calibrate our framework with data from the German electricity market. Our results reveal that while regionally differentiated network fees do have a significant impact on locational choice of generation capacities, we do not find significant effects on either welfare or network expansion.


FAU Authors / FAU Editors

Grimm, Veronika Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie
Rückel, Bastian
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie
Sölch, Christian
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie
Zöttl, Gregor Prof. Dr.
Professur für Volkswirtschaftslehre


Additional Organisation
Energie-Campus Nürnberg (EnCN)


How to cite

APA:
Grimm, V., Rückel, B., Sölch, C., & Zöttl, G. (2019). Regionally Differentiated Network Fees to Affect Incentives for Generation Investment. Energy, 177, 487-502. https://dx.doi.org/10.1016/j.energy.2019.04.035

MLA:
Grimm, Veronika, et al. "Regionally Differentiated Network Fees to Affect Incentives for Generation Investment." Energy 177 (2019): 487-502.

BibTeX: 

Last updated on 2019-02-05 at 17:08