Uncertain bidding zone configurations: The role of expectations for transmission and generation capacity expansion
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Authors: Ambrosius, M.; Egerer, J.; Grimm, V; van der Weijde, A. H.
Abstract
Ongoing policy discussions on the reconfiguration of bidding zones in European electricity markets induce uncertainty about the future market design. This paper deals with the question of how this uncertainty affects market participants and their long-run investment decisions in generation and transmission capacity. Generalizing the literature on pro-active network expansion planning, we propose a stochastic multilevel model which incorporates generation capacity investment, network expansion, and market operation, taking into account uncertainty about the future bidding zone configuration. Using a stylized two-node network, we disentangle different effects that uncertainty has on market outcomes. If there is a possibility that future bidding zone configurations provide improved regional price signals, welfare gains materialize even if the change does not actually take place. As a consequence, welfare gains of an actual change of the bidding zone configuration are substantially lower due to those anticipatory effects. Additionally, we show substantial distributional effects in terms of both expected gains and risks, between producers and consumers and between different generation technologies. (C) 2020 Elsevier B.V. All rights reserved.
Environmental pollution in Asian economies: Does the industrialisation matter?
OPEC ENERGY REVIEW
Authors: Zafar, Ayaz; Ullah, Sana; Majeed, Muhammad Tariq; Yasmeen, Rizwana
Abstract
Industrialisation is a significant part of any country's economic development. This study discusses the relationship between industrialisation and carbon dioxide emissions for Asian economies. The industrialisation has a major impact on carbon emissions, but its relationship with the environment differs in various regions of Asia. The empirical results are obtained by models of panel regression, which divide a balanced panel dataset of 46 countries into five groups depending on their subregions over the period 1991-2017. The tests of panel cointegration estimation found a majority of the cointegrated variables and verified the long-run relationship between the variables. The long-run coefficients are estimated using a fully modified ordinary least-squares (FMOLS) method, and results conclude that industrialisation has a positive impact on the carbon dioxide emissions in the long run. These findings reveal that various industrialisation development strategies should be pursued in a bid to reduce emissions, depending on the levels of economic growth. Based on the findings, some policy suggestions are proposed for Asian economies.