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Abstract We compare the welfare effects of different regulation schemes of electricity distribution utilities. The compared regulation schemes are Fixed Price regulation, Cost of Service regulation, Menu of Cost-Contingent Contracts and Simple Menu of Contracts. In our calculations we utilize the information of a firm’s potential to improve cost efficiency. The firm-specific cost information of Finnish electricity distribution utilities is obtained by using various Stochastic Frontier models. Our basic result is that welfare can be improved by changing the Cost of Service regulation scheme to the Menu of Contracts regulation. Welfare also increases in the case of Fixed Price regulation and Simple Menu of Contract regulation. There is however, a significant difference among regulation regimes on how this improved welfare is distributed to consumers and producers.

We track US imports of advanced technology wind and solar power-generation equipment from a panel of countries during 1989–2010, and examine the determining factors including country size, sector-specific US FDI outflow, and domestic wind and solar power generation. Differentiating between the core high-tech and the balance of system equipment, we find US imports of both categories have grown at significantly higher rate from the relatively poorer countries, and particularly China and India. Larger countries are found to be exporting significantly more, and US FDI is found to play a significant positive role in the exports of high-tech equipment for the poor countries. For the core wind and solar high-tech equipment, we find domestic renewable power generation of the exporting countries also played a significant positive role.

This study focuses on some of the programs and measures Brazil has undertaken over the past two or three decades in order to mitigate economic or environmental problems, which have also had positive effects on the reduction of the country's carbon dioxide emissions. Results show that, in the year 2000 alone, some 11% in CO2 emissions from energy use in Brazil have been reduced compared to what would have been emitted that year had the actions reviewed here not been implemented in good time. As these actions have not been motivated as a strategy to curb global climate change, if their benefits related to avoided carbon emissions are not fully appraised in the near future, chances are that these policies may be discontinued. For instance, in the case of the business-as-usual scenario drawn up by the Ministry of Mines and Energy in 2001, the discontinuity of the policies analyzed here would result in CO2 emissions 20% higher by 2020, compared to what would happen were these policies kept over the long term. Therefore, the perspective presented here spotlights some of the hidden benefits of the programs and measures underway in the country, justifying their continuation or even intensification.

Improving access to affordable modern energy is critical to improving living standards in the developing world. Rural households in India, in particular, are almost entirely reliant on traditional biomass for their basic cooking energy needs. This has adverse effects on their health and productivity, and also causes environmental degradation. This study presents a new generic modelling approach, with a focus on cooking fuel choices, and explores response strategies for energy poverty eradication in India. The modelling approach analyzes the determinants of fuel consumption choices for heterogeneous household groups, incorporating the effect of income distributions and traditionally more intangible factors such as preferences and private discount rates. The methodology is used to develop alternate future scenarios that explore how different policy mechanisms such as fuel subsidies and micro-financing can enhance the diffusion of modern, more efficient, energy sources in India.

This paper analyzes the impact of electricity storage on the production cost of a power system and the marginal cost of electricity (electricity price) using a unit commitment model. Also, real world data has been analyzed to verify the effect of storage operation on the electricity price using econometric techniques. The unit commitment model found that the deployment of a storage system reduces the fuel cost of the power system but increases the average electricity price through its effect on the power system operation. However, the reduction in the production cost was found to be less than the increase in the consumer's cost of electricity resulting in a net increase in costs due to storage. Different storage and CO2 price scenarios were investigated to study the sensitivity of these results. The regression analysis supports the unit commitment results and finds that the presence of storage increases average wholesale electricity prices for the case study system.

This article addresses the investment gap in renewable energy sources identified by several authors. Examining the case of a country, Finland, which introduced policy measures to diversify its renewable energy portfolio, we analyse the development of investments in renewable heat and power in response to new policy measures and contextual factors during the downturn period 2009–2013. We investigate investor heterogeneity, i.e., the diversity of logics employed by different types of RES investors. In spite of a severe financial recession, we find an emergence of new sources of investment. Among these new investor types, we find diversity in investment drivers and available options. These include investors mobilized by the feed-in-tariff to seek profitable targets and investors such as real estate owners investing in heat pumps for their own use and benefiting from low interest rates. We find that the diversification of investors supports the diversification in RES sources, and brings in new investors undeterred by the financial downturn. Our findings imply that policy-makers should recognize that the responses to distinct incentives and pressures vary by investor types. This also means that a mix of policies is required to maximize the contribution of different sectors to filling the renewable energy investment gap.

This paper studies the cost structure of Swiss gas distribution utilities. Several econometric models are applied to a panel of 26 companies over 1996–2000. Our main objective is to estimate the optimal size and scale economies of the industry and to study their possible variation with respect to network characteristics. The results indicate the presence of unexploited scale economies. However, very large companies in the sample and companies with a disproportionate mixture of output and density present an exception. Furthermore, the estimated optimal size for majority of companies in the sample has shown a value far greater than the actual size, suggesting remarkable efficiency gains by reorganization of the industry. The results also highlight the effect of customer density on optimal size. Networks with higher density or greater complexity have a lower optimal size.

Abstract The Slovenian Energy Law, adopted in 1999, has opened the internal market to competition up to 64% of the final consumption. The opening of the internal market to foreign competition is envisaged for 2003. With regard to the methodology of price regulation, the Energy Law introduces the “price-cap” regulation, which aims to give firms incentive for cost reduction. To provide information for effective price regulation, we estimated a cost frontier function on a sample of Slovenian electricity distribution utilities over the 1991–2000 period. The estimated efficient frontier could be used by Slovenian regulatory agency as a benchmark to regulate network access prices. Our results show that Slovenian distribution companies are cost inefficient. We have also proved the presence of increasing returns to scale with most utilities not achieving the minimum efficient scale. Thus, the Slovenian regulatory authority should consider how to induce mergers of small electricity distribution utilities into larger units.