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Impact of the regulatory framework for transmission investments on the cost of renewable energy in the EU

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  • Saguan, Marcelo
  • Meeus, Leonardo

Abstract

Under the current regulatory frame in the EU, transmission planning is done at the national level to maximize national welfare, rather than European welfare. In this paper, we develop a competitive equilibrium model that calculates the impact of this imperfect regulatory framework on the cost of renewable energy. We apply the model to a power system with two interconnected zones, and find that the impact is case specific, but significant. We also find that the negative impact of national transmission planning on the cost of renewable energy is more significant in a state of the world in which Member States trade renewable energy, but that this negative effect is much smaller than the positive effect of renewable energy trade between Member States. We conclude that the imperfect regulatory framework for transmission investment is a significant cost for renewable energy in the EU, but that it should not stop Member States from trading renewable energy.

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  • Saguan, Marcelo & Meeus, Leonardo, 2014. "Impact of the regulatory framework for transmission investments on the cost of renewable energy in the EU," Energy Economics, Elsevier, vol. 43(C), pages 185-194.
    • Handle: RePEc:eee:eneeco:v:43:y:2014:i:c:p:185-194
    DOI: 10.1016/j.eneco.2014.02.016
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    5. Meus, Jelle & Van den Bergh, Kenneth & Delarue, Erik & Proost, Stef, 2019. "On international renewable cooperation mechanisms: The impact of national RES-E support schemes," Energy Economics, Elsevier, vol. 81(C), pages 859-873.
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    10. Clastres, Cédric & Khalfallah, Haikel, 2021. "Dynamic pricing efficiency with strategic retailers and consumers: An analytical analysis of short-term market interactions," Energy Economics, Elsevier, vol. 98(C).
    11. Clemens Gerbaulet, Casimir Lorenz, Julia Rechlitz, and Tim Hainbach, 2014. "Regional Cooperation Potentials in the European Context: Survey and Case Study Evidence from the Alpine Region," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
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    More about this item

    Keywords

    Renewable energy; Transmission network; Electricity market; Modeling;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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