Essays om det russiske elektrisitets- og kapasitetsmarked

During the past decade the Russian power sector has undergone a dramatic reform. This has created a need for better understanding of the drivers and development of the sector. This dissertation describes the functioning of the Russian power market since 2006 by focusing on price formation, market power and the main regulatory obstacles for competition. Paper I focuses on time regularities in Russian power prices and compares these for the Siberian and the European zones. A set of distinct time regularities is revealed and discussed: “Day-of-the-week pattern”, “Weekend pattern” and “Time-of-the-day pattern”. The magnitudes of the price differences and time lag between the zones raise the question of extending the interconnectors between the zones. The persistence and magnitude of time regularities in power prices in the European zone imply that technologies that allow for flexibility, either on the supply or demand side, can be profitable. Paper II tests for market power in Northwest Russia using the Bresnahan–Lau framework by estimating residual demand and supply curves for thermal producers. I find that price mark-ups are close to 7–8% on average for the hours between 10 am and 9 pm and 2–3% for the remaining hours of the day. The residual demand curve elasticity is relatively high during peak hours. In addition, demand from Finland/Baltic states and Center FFZ24 have different profiles, such that total demand is most elastic during peak hours and least elastic during the periods of rapid change in consumption. The increase in natural gas prices was reflected directly in electricity prices in Northwest Russia in the analysed period. The domestic prices for natural gas are expected to increase to the level of European net-back prices, and given that natural gas will still be the main fuel in electricity production, this price increase will also be reflected in electricity prices. The objective of Paper III is to take into account the mathematical formulation of the Russian power market in the calculation of concentration measures and investigate the role of transmission constraints using the more detailed framework of the transmission constrained residual supply index (TCRSI). The analysis supports the previous findings of high market concentration in the Russian power market, but for different reasons. The adjusted HHI is below 1400 on average for all price zones and UESs and the adjusted RSI shows that there exist pivotal generators for more than 5% of hours in the analysed period only in two of 21 free-flow zones. Nevertheless, the TCRSI reveals that market concentration is critical for most FFZs in Russia in the UC auctions, day-ahead (DAM) and capacity markets. Market concentration decreases the higher is the share of hydro producers and transmission capacity to the neighbouring regions in the Russian power market in general and in addition depends on the share of fixed generation in the DAM. Paper IV investigates the main challenges and obstacles to competition in the Russian power market, especially regarding the role of the SO. The transmission constraints between the European and Siberian zones forced by the SO led to enormous subsidization of the Siberian zone by customers in the European zone in the DAM. In addition, must-run generation forced by the system security constraint and demand for heat affects competition in the capacity market and the UC auctions, which lead to distortions of DAM. The linear demand curve for capacity by price zone provides incentives to exert market power, price cap constraints the potential profits of generators, whereas the lower bound given by the total installed capacity reduces the incentives for competition. On the basis of these findings, I present the following policy recommendations: facilitate consumer response to variation in electricity and capacity prices and invest in flexible technology on supply or demand side; upgrade the existing transmission capacity to discourage the exercise of market power and to deal with the supply security concerns; introduce competitive pricing of heat and fuel (natural gas and coal)

Strategic investment and international spillovers in natural gas markets

This paper presents a game-theoretic analysis of multimarket competition with capacity investments, applied to international gas markets. It identifies a strategic advantage of ��focused�� pipeline gas producers (e.g., Gazprom) over ��diversified�� multimarket exporters of liquefied natural gas (e.g., Qatar). Based on this, the paper examines the spillover impacts of the Fukushima nuclear accident onto European gas markets, both in the short- and longer-term. It also discusses Russia��s gas export strategy, especially the 2014 deals with China. More generally, the analysis shows how a less efficient oligopolist can be more profitable, and speaks to policy discussions about ��security of supply�� in energy markets

Some mathematical models of pricing in electricity markets

У роботі обговорюються різні моделі ціноутворення на енергоринках. Наведено огляд різних дискретних та неперервних моделей. Дискретні моделі подані рівняннями в кінцевих різницях з запізненням. Неперервні моделі описуються динамічними системами. Одна з таких моделей удосконалена. Основний результат роботи – запропонована модель визначення рівноважної ціни на енергоринку загального типу. В модель включено хеджування ризиків з використанням портфелю деривативів. Управління параметрами моделі дає змогу обмежити коливання цін біфуркаціями типу народження циклу.The paper discusses various pricing models in the electricity markets. An overview of various discreteand continuous models is presented. Discrete models are represented by equations in finite differences with delay. Continuous models are described by dynamic systems. One of these models is improved. The main result of the work is proposed new integro-differential model for determining the equilibrium price in the genericelectricity market.The model incorporates risk hedging using a portfolio of derivatives. Managing the model's parameters allows to limit the price change by bifurcations of the type of cycle generation

Energy Regulation, Roll Call Votes and Regional Resources: Evidence from Russia

This paper investigates the relative impact of regional energy production on the legislative choices of Russian Duma deputies on energy regulation between 1994 and 2003. We apply Poole’s optimal classification method of roll call votes using an ordered probit model to explain energy law reform in the first decade of Russia’s democratic transition. Our goal is to analyze the relative importance of home energy on deputies’ behavior, controlling for other factors such as party affiliation, electoral mandate, committee membership and socio-demographic parameters. We observe that energy resource factors have a considerable effect on deputies’ voting behavior. On the other hand, we concurrently find that regional economic preferences are constrained by the public policy priorities of the federal center that continue to set the tone in energy law reform in post-Soviet Russia.Energy Regulation, Energy Roll Law Reform, Energy Resources, Roll Call Votes, Legislative Politics, State Duma, Russia

China and East Asian Energy : Prospects and Issues

In October 2005, the Crawford School (then the Asia Pacific School of Economics and Government) within the Australian National University (ANU) initiated a major research project on China and East Asian Energy. The project is being undertaken under the schools East Asia Forum in conjunction with the China Economy and Business Program. The first conference in the series being organised under the auspices of the China and East Asian Energy Strategies Research Program was hosted in Beijing by the Energy Research Institute and the ANU on 1011 October 2005. It was the first of five annual conferences in the program. This book brings together the key papers presented at that conference.

Carbon taxation in Russia : prospects for a double dividend and improved energy efficiency

Russia is not only one of the world?s major sources of carbon based energy ? coal, oil and gas ? but is also one the most intensive users of energy. Furthermore, Russia accounts for a disproportionately large share of global carbon dioxide emissions ? some 5% to 6% of global carbon dioxide emissions (EIA, 2011a). It has been estimated (World Bank, 2008) that Russia could reduce its use of primary energy use by 45% with consequent economic and environmental benefits. High energy and carbon intensity of the Russia economy is, inter alia, explained by low energy prices due to high export taxes as well as administrative regulation of domestic prices of gas and electricity and low environmental taxes. Carbon taxes are one such Pigouvian tax and they would address concerns on several fronts simultaneously. In the short to medium term they would, inter alia, lead to lower GHG emissions and encourage the diffusion of more energy efficient technologies. In the longer term, the increased cost of energy inputs is expected to induce technological progress. In this analysis, the macroeconomic and sectoral effects of carbon taxes on the Russia economy are examined. This analysis addresses the following objectives: i) to test the double dividend hypothesis under perfect and imperfect competition in output markets, to analyse ii) the incidence of carbon taxes, iii) impacts on sectoral competitiveness, iv) effects on income equity, and v) interactions of carbon taxes with other taxes. A computable single-country multi-sector comparative static CGE model is employed.Russland verfügt nicht nur über einen der größten Vorräte an kohlenstoffbasierter Energie wie Kohle, Rohöl und Gas, sondern ist auch einer der größten Energieverbraucher. Darüber hinaus ist Russland für einen überproportional großen Anteil von Kohlendioxid-Emission - etwa 5% bis 6% ? der weltweiten Kohlendioxidemission verantwortlich. Mit der Einführung einer Kohlendioxidsteuer könnten gleichzeitig unterschiedliche Wirkungen erzielt werden. Kurz- und mittelfristig würden Kohlenstoffsteuern sowohl zu einer Reduzierung von Treibhausgasemissionen als auch zur Einführung von energieeffizienteren Technologien führen. Langfristig wird erwartet, dass hohe Energiekosten den Anreiz zur Entwicklung und zur Investition in energiesparenden technischen Fortschritt erhöhen. Die vorliegende Arbeit analysiert und bewertet die makroökonomischen und sektoralen Auswirkungen einer Einführung von Kohlenstoffsteuern auf die russische Wirtschaft. Die Ziele der Arbeit bestehen darin, die Hypothese der doppelten Dividende für den Fall des vollkommenen und des unvollkommenen Wettbewerbs auf Gütermärkten zu überprüfen und die Inzidenz einer Kohlenstoffsteuer, ihre Auswirkungen auf die sektorale Wettbewerbsfähigkeit, ihre Auswirkungen auf die Einkommensverteilung und die Interaktion von Kohlenstoffsteuern mit anderen Steuern zu analysieren und zu bewerten. Als methodischer Ansatz wurde ein Single-Country und Multi-Sektor Model gewählt

An Emissions Tax in Siberia: Economic Theory, Firm Response, and Noncompliance in Imperfect Markets

The study sets out to discover the most important variables affecting the performance of an emissions tax in the context of a transition economy. An evaluation of the Siberian Pollution database confirms the acute severity of air pollution. Moving from the fact that the region has implemented an emissions charge system, the author examines some of the key theoretical variables explaining the degree of success of an emissions tax. After evaluating these variables, the author finds that most writings have underplayed or missed the most important factor affecting the implementation and functioning of an emissions tax in a transitional economy. Before implementing a market-oriented environmental policy, firms must respond to incentives in formal markets. These sources view the restructuring and environmental problem as a one of moving firms closer to formal markets, about which most Western models make their assumptions. However, the author implements a "compliance response boundary" framework, finding that the degree of market orientation of a firm may determine its response to the emissions tax. If firms fall outside of the compliance wedge, policy makers might expect the emissions tax to perform poorly in meeting policy goals of abatement and revenue. In this case, the tax provides few benefits in terms of enhancing efficiency, improving environmental conditions, or allowing "double dividends.