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Energy Regulation in a Low Carbon World

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  • Richard Green

Abstract

This chapter discusses the implications of an increasing proportion of renewable energy for the way in which energy companies are regulated. While the scope of regulation varies from country to country, depending on the degree of liberalisation, an increase in the overall cost of energy, and a shift from operating to capital costs will be relevant for all regulators. Where there is third party access to transmission, the tariffs may need to send stronger signals of the relative costs imposed by generators in different places, and may have significant effects on their profitability. Regulators responsible for generation revenues will have to allow peaking plants to recover their costs, even if those are rarely-used reserves to cope with intermittent renewable generation. Regulators in control of final prices charged to consumers will probably have to pass on a higher cost of energy, and determine how much is paid by different groups. The shift to renewable energy, however, will not change the fundamental tasks or nature of economic regulation.

Suggested Citation

  • Richard Green, 2010. "Energy Regulation in a Low Carbon World," Discussion Papers 10-16, Department of Economics, University of Birmingham.
    • Handle: RePEc:bir:birmec:10-16
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic regulation; renewable energy; electricity; transmission pricing;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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