The Impact of European Environmental Policies on Energy Prices. Possible Solutions in the Black Sea Region

Even if in Europe the costs of the transition to a green economy are reflected in the final consumer’s bills and in the prices of finished products - an effect already felt in the Community - the necessity to clean up the economy cannot be disputed. However, Europeans need to determine if the priority is to give up conventional energy or to develop the green energy production, because it is becoming increasingly clear that the two objectives cannot be achieved simultaneously without affecting the purchasing power of Europeans. Within this context, the study involves: a) the statistical analysis of the impact of the conventional energy overtaxation and the renewable energy subsidization on the average price charged by suppliers for final consumers on the Romanian market in the first three quarters of 2021 and b) to identify the correlation coefficient between the spot price for energy on the Romanian market and the share of renewable energy in the national mix for the same period. The objective of the research is to assess the costs paid by the final consumers within the context of the energy transition and the production capacity of renewable sources that must be added to the National Energy System for their amortization. The results show the importance of the Black Sea basin in the regional energy equation and its potential to become a point of attraction for European energy investments.

Gas supply/demand imbalance will persist into 2023

Significance The Asian spot price for liquefied natural gas (LNG) set records in late 2020 and again in October 2021, equivalent to USD325 per barrel of oil equivalent, with European gas prices some 30% lower. Gas prices will greatly influence living standards and economic prospects in 2022-23. Impacts The global gas market will be tight into 2022, but the scale of price rises depends on weather, Russian strategy and the economic situation. The market will turn back to oversupply, probably after 2023, assuming recent LNG projects stay on schedule. Gas companies are increasingly paying attention to decarbonisation and hydrogen, but this will not have a major direct impact in 2022-23.

The Impact of Variable Renewable Energy Penetration on Wholesale Electricity Prices in Japan Between FY 2016 and 2019

The merit order effect (MOE), which renewable energy sources can decrease wholesale electricity prices, plays an important role in establishing low-carbon societies. After the liberalization of the electricity market, the trade volume of the Japan Electric Power Exchange (JEPX) day-ahead spot market drastically increased between 2016 and 2019; however, price spikes still occur often. Ordinary least squares and quantile regression analyses were applied in this study to investigate how wind and solar photovoltaics (PV) energy generation affect the JEPX day-ahead spot price by time, price range, and area, and we concluded that the MOE of wind increased between 2016 and 2019 while that of PV decreased during this time. In regard to the high price ranges, although wind generation is not significant in terms of reducing price spikes, PV had this effect in 2016 and 2017 but not during the other years covered. The study area was divided into four regions, and each area followed trends that were different from those of the national analysis. Overall, the key finding of our study is that wind power has more potential to reduce electricity prices than PV.

Essays on the Interaction Between Risk and Market Structure in Electricity Markets

<p>This thesis proposes a new framework to jointly analyze electricity spot market and hedging decisions in an oligopolistic setup. Firstly, we find that, when exogenous, both quantity of electricity hedged by contract and vertical integration decrease the equilibrium spot price. Secondly, we use a hybrid approach and show that market structure can affect a generator’s decision to vertically integrate under uncertain demand. Thirdly, we consider uncertainty in costs and demand and show that concentration in the spot market, for a given hedge quantum, can increase forward prices and affect the slope of the forward curve. Our empirical results indicate that the model fits the New Zealand electricity market well. This evidence that market structure and hedging decisions are closely connected is further explored in a three period equilibrium model for the spot and forward markets, where hedging occurs prior to the submission of supply curves. Taking into account demand-side and supply-side uncertainties, we find that when hedging is endogenous, hedging quantities are affected by spot market parameters, but market power is itself mitigated in the conscious hedging choice of generators. We also show that forward markets can coexist with highly vertically integrated markets. The importance of our results is general. Our models can be used by policy makers to analyze investment and forward price implications of changes in the spot market structure. Our results also indicate that electricity generators, in equilibrium, face a trade-off between market power and hedging. Given that it is socially beneficial to manage risk, the equilibrium impact of their choices on welfare should not be considered in isolation by competition authorities.</p>

Essays on the Interaction Between Risk and Market Structure in Electricity Markets

<p>This thesis proposes a new framework to jointly analyze electricity spot market and hedging decisions in an oligopolistic setup. Firstly, we find that, when exogenous, both quantity of electricity hedged by contract and vertical integration decrease the equilibrium spot price. Secondly, we use a hybrid approach and show that market structure can affect a generator’s decision to vertically integrate under uncertain demand. Thirdly, we consider uncertainty in costs and demand and show that concentration in the spot market, for a given hedge quantum, can increase forward prices and affect the slope of the forward curve. Our empirical results indicate that the model fits the New Zealand electricity market well. This evidence that market structure and hedging decisions are closely connected is further explored in a three period equilibrium model for the spot and forward markets, where hedging occurs prior to the submission of supply curves. Taking into account demand-side and supply-side uncertainties, we find that when hedging is endogenous, hedging quantities are affected by spot market parameters, but market power is itself mitigated in the conscious hedging choice of generators. We also show that forward markets can coexist with highly vertically integrated markets. The importance of our results is general. Our models can be used by policy makers to analyze investment and forward price implications of changes in the spot market structure. Our results also indicate that electricity generators, in equilibrium, face a trade-off between market power and hedging. Given that it is socially beneficial to manage risk, the equilibrium impact of their choices on welfare should not be considered in isolation by competition authorities.</p>

Global uranium market imbalance will intensify

Significance By September, the spot price of uranium had surged to USD50 per pound (USD110 per kilogram), the highest since 2015. It remains above USD44. Sprott currently holds 24 million pounds of uranium, equivalent to 20% of annual mining production. Impacts Kazatomprom, the world’s largest uranium miner, is investing in a new physical uranium fund, ANU Energy, with plans to raise USD500mn. The Biden administration is taking steps to establish a US uranium reserve,originally proposed by the previous administration. Russia's plans to raise its share in global nuclear energy from about 20% to 25% by 2045, requiring completion of 24 new reactors. Westinghouse has reached an agreement to build nuclear reactors in Ukraine. Greenland's new left-leaning government is preparing legislation that will ban uranium mining.

Effects of the COVID-19 Pandemic on the Spot Price of Colombian Electricity

COVID-19 disease shocked global economic activity and affected the electricity markets due to lockdown and work-from-home policies. Therefore, this study proposes an empirical analysis to identify the electricity spot price response during the preventive and mandatory insulation in Colombia, where the economic contraction caused the largest decrease in the electricity demand, especially in the industrial sector. The methodology applied was quantile regression to quantify the non-linear effect on the spot price returns, and two sample periods were selected to contrast the results: 2018 and 2019. The main findings showed that regulated demand variation caused the highest variability on the spot price dynamic during the strict quarantine. However, the price could not fully capture the effects of the demand change due to the short duration of the shock and, also, the price variability in 2019 was higher than 2020 by an El Niño shock.