IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v147y2020ics0301421520304195.html
   My bibliography  Save this article

Extended policy mix in the power sector: How a coal phase-out redistributes costs and profits among power plants

Author

Listed:
  • Gillich, Annika
  • Hufendiek, Kai
  • Klempp, Nikolai

Abstract

With the phase-out of coal power plants, the existing mix of instruments aimed at decarbonising electricity sectors is getting more complex. This paper contributes to its understanding by highlighting the impact of coal phase-out, CO2-price and increasing capacity of variable renewable energies on contribution margins of power plants. By visualizing these three instruments in a brownfield screening curves model (SCM), their fundamental effects on plant operation, electricity price and margins become apparent at a glance. Moreover, the SCM allows to derive generic statements about winners and losers on the supply side. Results are then quantified within a case study for Germany using the power sector model E2M2. The high resolution regarding time and generation system permits a realistic simulation of electricity prices and thus of margins at plant level.

Suggested Citation

  • Gillich, Annika & Hufendiek, Kai & Klempp, Nikolai, 2020. "Extended policy mix in the power sector: How a coal phase-out redistributes costs and profits among power plants," Energy Policy, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:enepol:v:147:y:2020:i:c:s0301421520304195
    DOI: 10.1016/j.enpol.2020.111690
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421520304195
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2020.111690?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hirth, Lion & Ueckerdt, Falko, 2013. "Redistribution effects of energy and climate policy: The electricity market," Energy Policy, Elsevier, vol. 62(C), pages 934-947.
    2. Jotzo, Frank & Mazouz, Salim, 2015. "Brown coal exit: A market mechanism for regulated closure of highly emissions intensive power stations," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 71-81.
    3. Olsina, Fernando & Garces, Francisco & Haubrich, H.-J., 2006. "Modeling long-term dynamics of electricity markets," Energy Policy, Elsevier, vol. 34(12), pages 1411-1433, August.
    4. Richard Green, 2005. "Electricity and Markets," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 21(1), pages 67-87, Spring.
    5. Hill, Lawrence J. & Hirst, Eric & Schweitzer, Martin, 1992. "The process of integrating DSM and supply resources in electric utility planning," Utilities Policy, Elsevier, vol. 2(2), pages 100-107, April.
    6. De Jonghe, Cedric & Delarue, Erik & Belmans, Ronnie & D'haeseleer, William, 2009. "Interactions between measures for the support of electricity from renewable energy sources and CO2 mitigation," Energy Policy, Elsevier, vol. 37(11), pages 4743-4752, November.
    7. Rogge, Karoline S. & Reichardt, Kristin, 2016. "Policy mixes for sustainability transitions: An extended concept and framework for analysis," Research Policy, Elsevier, vol. 45(8), pages 1620-1635.
    8. Ritzenhofen, Ingmar & Birge, John R. & Spinler, Stefan, 2016. "The structural impact of renewable portfolio standards and feed-in tariffs on electricity markets," European Journal of Operational Research, Elsevier, vol. 255(1), pages 224-242.
    9. Heinrichs, Heidi Ursula & Markewitz, Peter, 2017. "Long-term impacts of a coal phase-out in Germany as part of a greenhouse gas mitigation strategy," Applied Energy, Elsevier, vol. 192(C), pages 234-246.
    10. De Jonghe, Cedric & Delarue, Erik & Belmans, Ronnie & D'haeseleer, William, 2011. "Determining optimal electricity technology mix with high level of wind power penetration," Applied Energy, Elsevier, vol. 88(6), pages 2231-2238, June.
    11. Koomey, Jonathan & Rosenfeld, Arthur H. & Gadgil, Ashok, 1990. "Conservation screening curves to compare efficiency investments to power plants," Energy Policy, Elsevier, vol. 18(8), pages 774-782, October.
    12. Lamont, Alan D., 2008. "Assessing the long-term system value of intermittent electric generation technologies," Energy Economics, Elsevier, vol. 30(3), pages 1208-1231, May.
    13. Christoph Bertram & Gunnar Luderer & Robert C. Pietzcker & Eva Schmid & Elmar Kriegler & Ottmar Edenhofer, 2015. "Complementing carbon prices with technology policies to keep climate targets within reach," Nature Climate Change, Nature, vol. 5(3), pages 235-239, March.
    14. Kennedy, Scott, 2005. "Wind power planning: assessing long-term costs and benefits," Energy Policy, Elsevier, vol. 33(13), pages 1661-1675, September.
    15. Steffen, Bjarne & Weber, Christoph, 2013. "Efficient storage capacity in power systems with thermal and renewable generation," Energy Economics, Elsevier, vol. 36(C), pages 556-567.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nils Seckinger & Peter Radgen, 2021. "Dynamic Prospective Average and Marginal GHG Emission Factors—Scenario-Based Method for the German Power System until 2050," Energies, MDPI, vol. 14(9), pages 1-22, April.
    2. Malec, Marcin, 2022. "The prospects for decarbonisation in the context of reported resources and energy policy goals: The case of Poland," Energy Policy, Elsevier, vol. 161(C).
    3. Ozan Korkmaz & Bihrat Önöz, 2022. "Modelling the Potential Impacts of Nuclear Energy and Renewables in the Turkish Energy System," Energies, MDPI, vol. 15(4), pages 1-25, February.
    4. Lin, Boqiang & Liu, Zhiwei, 2024. "Optimal coal power phase-out pathway considering high renewable energy proportion: A provincial example," Energy Policy, Elsevier, vol. 188(C).
    5. Ruhnau, O. & Bucksteeg, M. & Ritter, D. & Schmitz, R. & Böttger, D. & Koch, M. & Pöstges, A. & Wiedmann, M. & Hirth, L., 2022. "Why electricity market models yield different results: Carbon pricing in a model-comparison experiment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 153(C).
    6. Heerma van Voss, Bas & Rafaty, Ryan, 2022. "Sensitive intervention points in China's coal phaseout," Energy Policy, Elsevier, vol. 163(C).
    7. Yilun Luo & Esmaeil Ahmadi & Benjamin C. McLellan & Tetsuo Tezuka, 2022. "Will Capacity Mechanisms Conflict with Carbon Pricing?," Energies, MDPI, vol. 15(24), pages 1-25, December.
    8. Tiedemann, Silvana & Müller-Hansen, Finn, 2023. "Auctions to phase out coal power: Lessons learned from Germany," Energy Policy, Elsevier, vol. 174(C).
    9. Annika Gillich & Kai Hufendiek, 2022. "Asset Profitability in the Electricity Sector: An Iterative Approach in a Linear Optimization Model," Energies, MDPI, vol. 15(12), pages 1-31, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Güner, Yusuf Emre, 2018. "The improved screening curve method regarding existing units," European Journal of Operational Research, Elsevier, vol. 264(1), pages 310-326.
    2. Anke, Carl-Philipp & Hobbie, Hannes & Schreiber, Steffi & Möst, Dominik, 2020. "Coal phase-outs and carbon prices: Interactions between EU emission trading and national carbon mitigation policies," Energy Policy, Elsevier, vol. 144(C).
    3. Lion Hirth, 2015. "The Optimal Share of Variable Renewables: How the Variability of Wind and Solar Power affects their Welfare-optimal Deployment," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    4. Squalli, Jay, 2017. "Renewable energy, coal as a baseload power source, and greenhouse gas emissions: Evidence from U.S. state-level data," Energy, Elsevier, vol. 127(C), pages 479-488.
    5. Haas, J. & Cebulla, F. & Cao, K. & Nowak, W. & Palma-Behnke, R. & Rahmann, C. & Mancarella, P., 2017. "Challenges and trends of energy storage expansion planning for flexibility provision in low-carbon power systems – a review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 603-619.
    6. Hirth, Lion & Ueckerdt, Falko & Edenhofer, Ottmar, 2015. "Integration costs revisited – An economic framework for wind and solar variability," Renewable Energy, Elsevier, vol. 74(C), pages 925-939.
    7. Ueckerdt, Falko & Brecha, Robert & Luderer, Gunnar, 2015. "Analyzing major challenges of wind and solar variability in power systems," Renewable Energy, Elsevier, vol. 81(C), pages 1-10.
    8. Hirth, Lion, 2013. "The market value of variable renewables," Energy Economics, Elsevier, vol. 38(C), pages 218-236.
    9. Richstein, Jörn C. & Chappin, Émile J.L. & de Vries, Laurens J., 2015. "Adjusting the CO2 cap to subsidised RES generation: Can CO2 prices be decoupled from renewable policy?," Applied Energy, Elsevier, vol. 156(C), pages 693-702.
    10. Lion Hirth, 2013. "The Market Value of Variable Renewables. The Effect of Solar and Wind Power Variability on their Relative Price," RSCAS Working Papers 2013/36, European University Institute.
    11. Acevedo, Giancarlo & Bernales, Alejandro & Flores, Andrés & Inzunza, Andrés & Moreno, Rodrigo, 2021. "The effect of environmental policies on risk reductions in energy generation," Journal of Economic Dynamics and Control, Elsevier, vol. 126(C).
    12. De Jonghe, C. & Hobbs, B. F. & Belmans, R., 2011. "Integrating short-term demand response into long-term investment planning," Cambridge Working Papers in Economics 1132, Faculty of Economics, University of Cambridge.
    13. Hirth, Lion & Ueckerdt, Falko, 2013. "Redistribution effects of energy and climate policy: The electricity market," Energy Policy, Elsevier, vol. 62(C), pages 934-947.
    14. Darmani, Anna & Rickne, Annika & Hidalgo, Antonio & Arvidsson, Niklas, 2016. "When outcomes are the reflection of the analysis criteria: A review of the tradable green certificate assessments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 372-381.
    15. Olsina, Fernando & Roscher, Mark & Larisson, Carlos & Garces, Francisco, 2007. "Short-term optimal wind power generation capacity in liberalized electricity markets," Energy Policy, Elsevier, vol. 35(2), pages 1257-1273, February.
    16. Samuel Fankhauser & Cameron Hepburn & Jisung Park, 2010. "Combining Multiple Climate Policy Instruments: How Not To Do It," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 1(03), pages 209-225.
    17. Van den Bergh, Kenneth & Delarue, Erik & D'haeseleer, William, 2013. "Impact of renewables deployment on the CO2 price and the CO2 emissions in the European electricity sector," Energy Policy, Elsevier, vol. 63(C), pages 1021-1031.
    18. Sibylle Braungardt & Veit Bürger & Benjamin Köhler, 2021. "Carbon Pricing and Complementary Policies—Consistency of the Policy Mix for Decarbonizing Buildings in Germany," Energies, MDPI, vol. 14(21), pages 1-14, November.
    19. Liu, Cengceng & Li, Nan & Zha, Donglan, 2016. "On the impact of FIT policies on renewable energy investment: Based on the solar power support policies in China's power market," Renewable Energy, Elsevier, vol. 94(C), pages 251-267.
    20. Hirth, Lion & Müller, Simon, 2016. "System-friendly wind power," Energy Economics, Elsevier, vol. 56(C), pages 51-63.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:147:y:2020:i:c:s0301421520304195. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.