Linking Retail Electricity Pricing and the Decarbonisation of the Energy Sector: a Microeconomic Approach
|Title:||Linking Retail Electricity Pricing and the Decarbonisation of the Energy Sector: a Microeconomic Approach||Authors:||Mastrandrea, Linda||Permanent link:||http://hdl.handle.net/10197/12773||Date:||Dec-2021||Online since:||2022-02-28T16:26:36Z||Abstract:||In this paper we address the problem of policy coordination in the electricity sector when the supply side is subject to a carbon constraint. We speciﬁcally evaluate the link between retail electricity pricing and GHG emissions reduction. Moreover, we incorporate in the analysis both the variability of electricity demand and the uncertainty of clean energy supply. By developing an analytical framework grounded in the standard microeconomic theory, we model peak pricing, block pricing and real time pricing from the perspective of a representative consumer. We then estimate the impact of each pricing scheme on the social welfare function, with a speciﬁc focus on the external cost function where GHG emissions are explicitly accounted for. We ﬁnd that the impact of peak and block pricing on the carbon emissions form the electricity sector is strongly inﬂuenced by the relative emissions intensity of baseload and peak generation. In contrast, the role of real time pricing as an environmental policy tool depends on the possibility for retail customers to discriminate their consumption over the quality and price of the electricity demanded.||Type of material:||Working Paper||Publisher:||University College Dublin. School of Economics||Start page:||1||End page:||37||Series/Report no.:||UCD Centre for Economic Research Working Paper Series; WP2021/28||Copyright (published version):||2021 the Author||Keywords:||Energy economics; Retail electricity pricing; Greenhouse gas emissions||JEL Codes:||Q42; D62||Language:||en||Status of Item:||Not peer reviewed||This item is made available under a Creative Commons License:||https://creativecommons.org/licenses/by-nc-nd/3.0/ie/|
|Appears in Collections:||Economics Working Papers & Policy Papers|
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