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Incumbent's Bane or Gain? Renewable Support and Strategic Behavior in Electricity Markets
JournalArticle (Originalarbeit in einer wissenschaftlichen Zeitschrift)
 
ID 4612840
Author(s) Darudi, Ali; Weigt, Hannes
Author(s) at UniBasel Weigt, Hannes
Darudi, Ali
Year 2020
Title Incumbent's Bane or Gain? Renewable Support and Strategic Behavior in Electricity Markets
Journal The energy journal
Volume 41
Pages / Article-Number 8
Abstract Incumbent firms play a decisive role in the success of renewable support policies. Their investments in renewables as well as their operational strategies for their conventional CO2 emitting technologies affect the transition to a sustainable energy system. We use a game theoretical framework to analyze incumbents reactions to different renewable support policies, namely feed-in tariff (FIT), feed-in premium (FIP), and auction-based policies. We show that a regulator should choose a support scheme based on concerns about either market power or emission abatement: in FIP-based policies, the incumbents strategic behavior leads to lower CO2 emissions, but a higher market price compared to FIT-based policies. Furthermore, for FIP-based policies, the regulator might want to incentivize incumbents directly (to further reduce CO2 emissions) or newcomers (to further reduce market power). Particularly in FIP-based auctions, incumbents have the incentive to obtain all auctioned capacity, which could lead to an unchanged market price despite the entrance of new capacity into the market.
Publisher International Association for Energy Economics
ISSN/ISBN 0195-6574 ; 1944-9089
edoc-URL https://edoc.unibas.ch/80800/
Full Text on edoc No
Digital Object Identifier DOI 10.5547/01956574.41.SI1.adar
 
   

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