Adjusting the CO2 cap to subsidised RES generation: Can CO2 prices be decoupled from renewable policy?

The low prices in the European Emission Trading System (EU ETS) have triggered discussions of various possible reforms. One option is to decouple the CO 2 prices from renewable energy policy by adjusting the emission cap to renewable energy investment overshoots. We introduce two ways of reducing the CO 2 cap in response to overshoots of...

The market (in-)stability reserve for EU carbon emission trading: Why it might fail and how to improve it

The EU parliament has accepted a proposal of the EU commission on the backloading of EU emission allowances (EUA), where the auctioning of EUAs is postponed to future time periods. The EU commission has also proposed a market stability reserve (MSR), which is a quantity-based stabilisation policy that is aimed at controlling the volume of EUAs...

The Stability Reserve in EU Carbon Emission Trading: Does it Deliver What it Promises?

In recent years the Europe Unions emission trading system (EU ETS) has experienced very low prices. This has triggered a political discussion about stabilising the EU ETS and improving incentives for investing in CO2 abatement. As a result of this discussion, the EU parliament accepted a proposal of the EU commission on the backloading of EU...

Designing the market design for the electricity system of the future

In many countries, the characteristics of the electricity supply system are changing. Important developments that are unfolding in the electricity sector are (i) the growth of generation from renewable sources (PV, wind) that are less controllable than traditional power plants and that for a large part feed in into the distribution grids, and ...

Cross-border electricity market effects due to price caps in an emission trading system: An agent-based approach

The recent low CO2 prices in the European Union Emission Trading Scheme (EU ETS) have triggered a discussion whether the EU ETS needs to be adjusted. We study the effects of CO2 price floors and a price ceiling on the dynamic investment pathway of two interlinked electricity markets (loosely based on Great Britain, which already has introduced a...

Understanding power plant investment decision processes

In order to understand how companies make investment decisions under conditions of deep uncertainty, we interviewed a number of actors in the Dutch electricity sector. Most of the economic literature that is devoted to this question is prescriptive in nature, describing rational methods to the investment decision process (such as real options...

Simulating producer behavior in congested electricity systems

Congestion management in liberalized power sectors is a complex multi-actor problem, where technical, economic, social, regulatory, and political aspects all play a role. This paper presents a participatory simulation tool that can be used to evaluate congestion management mechanisms. It was developed to facilitate research related to strategic...

Impacts of the introduction of CO2 price floors in a two-country electricity maket model

The recent low of CO2 prices in the European Union Emission Trading Scheme have triggered a renewed discussion, whether the introduction of a CO2 price oor would lower investor uncertainty and thus trigger more investment in low-carbon electricity generation. We compare the effects of a CO2 price floor on the dynamic investment pathway of an...

Agent-based models for policy makers

In order to support policy decisions, we have developed a modelling platform called AgentSpring, which facilitates the development of agent-based models in a modular and structured manner, using state-of-the-art IT development principles and tools. An attractive web-based interface allows for the interaction with policy makers. A model named...

European security of electricity supply policy in the context of increasing volumes of intermittent generation

In response to plans in France and the UK to implement a capacity mechanism and the recent implementation of a small strategic reserve in Germany, we address the question of the cross-border effects of national implementation of a capacity mechanism in Europe’s interconnected markets. We model some of the effects that may arise when different...

Impact of Variable Renewable Energy on European Cross-Border Electricity Transmission

The estimated growth of Europe’s electricity demand and the policy goals of mitigating climate change result in an expected increase in variable renewable energy. A high penetration of wind and solar energy will bring several new challenges to the European electricity transmission network. The objective of this paper is to understand the effects...

A review of agent-based models for forecasting the deployment of distributed generation in energy systems

Agent-based models are seeing increasing use in the study of distributed generation (DG) deployment. Researchers and decision makers involved in the implementation of DG have been lacking a concise overview of why they should consider using agent-based modeling (ABM) for forecasting purposes. Since this particular field of inquiry has only...

Carbon policies: Do they deliver in the long run?

Carbon taxation and emission trading are policy instruments for achieving significant CO2 emission reduction by inducing a shift in technology and fuel choice. Simulations with a quantitative agent-based model of a competitive electricity generation sector show that under both policies CO2 emissions increase for 10-15 years due to the long life...

The impact of microgeneration upon the Dutch balancing market

The share of microgeneration (power generation at the level of households and small businesses) in the Dutch electricity system continues to grow. Over time, this development may pose a threat to the reliability and efficiency of the Dutch electricity balancing market. We investigated possible changes to the design of the Dutch balancing market...

Securing the public interest in electricity generation markets. The myths of the invisible hand and the copper plate

Two aspects of investment in generation capacity in liberalized electricity markets are investigated: the question of whether investment will be sufficient to meet society's goals for the reliability of electricity supply (generation adequacy) and the question of how to coordinate investment in electricity generation capacity in a competitive...