An Econometric Model for the Oil Dependence of the Russian Economy

There is lot of discussion on the level of the oil dependence of the Russian economy, as well as on whether the Russian Federation presents signs of the Dutch disease or even if already suffers by it. In this paper, we develop econometric models for examining the oil dependence of the Russian economy. We construct two VARs and then we proceed with VECMs models. The models consider macroeconomic factors, such as industrial production index, unemployment, GDP and government expenditure, as well as oil factors, such crude oil price and Russian oil production. We employ impulse response functions to catch the interactions among variables. We find strong evidence on the oil dependence of the Russian economy; however, we do not find firm established proof of the Dutch disease. Keywords: Russia, oil, cointegration JEL Classifications: Q43, C01, P4

An Optimization Model of the European Natural Gas System

The European Commission has identified the Energy Union, as one of its major priorities. This aims to deliver secure, climate-friendly and affordable energy to the European citizens. Towards implementing those goals, the European Commission is working towards diversifying routes and resources, and implementing the target model for the gas and electricity markets. This paper presents an optimization model of the European natural gas system. The model identifies the natural gas suppliers' mix for Europe and for each Member State. The model, being an optimization model, provides the economically optimum energy mix, subject to the technical and policy constraints of the gas transmission system. The model can also provide useful insights to the decision makers and market participants on the needed critical infrastructure. Model results show that the Russian natural gas is expected to have a prominent role in the EU, even by imposing energy security constraints. The incorporation in the model of the strategy of the companies, as well as the reserved capacity in the interconnections in each member state, would provide a more robust identification of the energy mix, the wholesale prices and the needed infrastructure. Keywords: Natural Gas; Optimization; pipelines; Europe. JEL Classifications: Q4; C61; L9

Energy Policy Formulation in Israel Following its Recent Gas Discoveries

The development of gas in the Tamar and Leviathan fields is a turning point for Israeli energy policy, as its government decided not only to enhance its energy security but also to become an energy exporter. This paper examines the factors that affect the formulation of energy policy in Israel. Initially, it examines the internal and external environment of Israel, assessing the evolution of policy, regulatory and competition issues related to the recent discoveries in its territory. Then it presents a qualitative research, undertaken in 2015, based on the responses of regional energy experts. The discoveries are not considered “a black swan” that change regional energy markets, but they are likely to be affect local energy systems. The paper demonstrates that Israel's energy policy will be evaluated mainly based on its techno-economic feasibility, considering that its energy policy does not strengthen political tensions while any progress in resolving the region's political disputes should be viewed as an unexpected gain. Keywords: Israel, Energy Policy, Energy Resources. JEL Classifications: Q40, Q48, N5

Integration of Electric Vehicles in the Unit Commitment Problem with Uncertain Renewable Electricity Generation

The integration of electric vehicles (EVs) in the power system is a challenging issue for the power system and network operators. The paper uses several Unit Commitments (UC) models which incorporate high levels of wind power production, applying different methods to tackle the renewables' uncertainty. The selected power system is IEEE RTS 96. The UC models are further extended to integrate the EVs. Our focus is to assess the EVs impact on the total operating cost and the power grid adequacy to handle the extra load, by examining different charging profiles and penetration levels of EVs with the different UC models. Simulation results show that an optimized charging strategy is considerably more efficient than the random charging strategy, both in the total operating cost and the ability to integrate more EVs. The comparison between the UC models show that the most robust UC model leads to higher total operating cost, due to its more conservative methodology to tackle the stochastic nature of wind. There exists a non-linear trade-off between power system robustness and the total operating cost, depending on each power system characteristics, affecting also the penetration level of EVs. Keywords: Electric Vehicles, Unit Commitment, Renewables, Uncertainty, Power System, IEEE RTS 96 JEL Classifications: Q47, L94 DOI: https://doi.org/10.32479/ijeep.712

Price Signal of Tradable Guarantees of Origin for Hedging Risk of Renewable Energy Sources Investments

The risk of renewable energy sources (RES) investments in several European Union (EU) countries is offset by site-specific compensation, resulted by competitive auctions according the EU state aid guidelines for energy for the period 2014-2020. However, this scheme of incentivizing RES will probably be replaced, inheriting risk for RES investments. A potential market-based scheme could be the introduction of tradable guarantees of origin (GOs). This paper uses an integrated model, integrating the optimal power systems expansion planning problem with the unit commitment problem, which performs the simulation of the day-ahead electricity market. The model is used for the expansion of the Greek power system, identifying the RES capacity mix per technology type. The model estimates the new RES capacity, the evolution of the day-ahead price and the levelized cost of avoided energy. This enables the identification of the remuneration of RES producers from the wholesale market and the premium required for covering their levelized cost of electricity. The estimation of this premium provides insights on the price signals of tradable GOs, which could offset the risk of RES investments. The paper finally discusses the GOs' status and challenges, towards becoming the preferred policy for RES promotion. Keywords: Renewable Energy Sources, Guarantees of Origin, Risk, Power System Expansion Planning, Feed-in-Tariff, State Aid Guidelines JEL Classifications: Q4, Q4

Analysing Carbon Pass-Through Rate Mechanism in the Electricity Sector: Evidence from Greece

In this study, we shed light into the carbon pass-through rate mechanism to wholesale prices in the Greek electric market. For this reason, we utilize a rich micro-level panel, including hourly data for 23 power plants spanning the period January 2014 to December 2017. In order to study the pass-through of emissions costs to wholesale electricity prices, we used an instrumental variable methodology. Our findings survived several robustness checks, accounting for logged linear and non-linear econometric specifications. Moreover, they are in alignment with the relevant recent literature, indicating the existence of an almost complete pass-through rate mechanism. This means that electricity firms almost fully internalize the cost of CO2 permits, incurring important policy implications to policy makers and government officials

Analysing Carbon Pass-Through Rate Mechanism in the Electricity Sector: Evidence from Greece

In this study, we shed light into the carbon pass-through rate mechanism to wholesale prices in the Greek electric market. For this reason, we utilize a rich micro-level panel, including hourly data for 23 power plants spanning the period January 2014 to December 2017. In order to study the pass-through of emissions costs to wholesale electricity prices, we used an instrumental variable methodology. Our findings survived several robustness checks, accounting for logged linear and non-linear econometric specifications. Moreover, they are in alignment with the relevant recent literature, indicating the existence of an almost complete pass-through rate mechanism. This means that electricity firms almost fully internalize the cost of CO2 permits, incurring important policy implications to policy makers and government officials

An econometric model to assess the Saudi Arabia crude oil strategy

This paper aims at disentangling Saudi Arabia’s crude oil strategy, taking into account critical factors such as oil stock, crude oil price, world demand conditions and macro-economic factors. Our study estimates three Error Correction Models (ECMs), using data spanning the period 1971-2015. The empirical findings provide sufficient evidence on the way Saudi Arabia’s crude oil production strategy affects crude oil market. Specifically, when world crude oil demand increases, Saudi Arabia engages into exploitative practices since it tries to impose higher prices leaving room for the increased demand to the rest of the OPEC countries (market sharing). Moreover, we argue that Saudi Arabia’s strategy is in alliance with the trade-off theory of producing more crude oil to establish its market share. However, the country does not intent to fully cover all the increased demand and does not over-react to short-run demand fluctuations since such a strategy would push crude oil prices down

Financial Analysis of European Energy Companies

Energy union and climate stands as one of the priorities of the European commission, aiming at the provision of secure, environmentally friendly and affordable energy. European energy policy over the last two decades have reshaped energy markets challenging the profitability and viability of energy companies. The latter must prove flexible in their management, including diversification of their portfolio, proceeding on structural unbundling and extending their operations in new markets and regions. Scope of the paper is to assess the financial and liquidity performances of key European energy companies over the period 2008-2017. The focus of the analysis concerns liquidity, profitability, operational performance and capital structure. The analysis is carried out in key energy companies, selected to have an extended geographical representation. Results indicate that gas and oil companies have less risk compared to power companies, attributed mainly to debt exposure. The renewable sector, although underrepresented in the examined sample, implies potential for high profitability. The profitability of power companies is affected by the ownership of assets with low operating costs and by diversification of operations, including regulated network operations. Eastern European power companies are favored by the derogation of EU regulation, though provision of free emission allowances.

Transmission Expansion and Electricity Trade: A Case Study of the Greek Power System

The integration of European electricity markets, through the market coupling process, can create significant efficiency gains in terms of social welfare to European consumers and industries. The market coupling process is anticipated to more efficiently utilize the generation and transmission activities, reducing the requirements of large idle generation capacity. This paper uses an optimization-based methodological framework to address the problem of the optimal planning of a power system at an annual level in competitive and volatile power markets, under dynamic formulation of the strategy employed by all market participants. The model is used for the scenario-based transmission expansion of the Greek power system with neighboring power systems in Southeast Europe, identifying its impact on a series of operational and economic aspects. The model determines the optimal power generation mix in each scenario, the electricity trade with the neighboring countries, the evolution of the system marginal price and the resulting environmental impact. This enables the identification of the remuneration of all types of producers from the wholesale market through a detailed calculation of all the relevant cost components. The proposed approach can provide useful insights on the optimal portfolio determination by potential investors at a national and/or regional level, highlighting potential risks and appropriate price signals on critical infrastructure projects under real electricity market operating conditions. Keywords: CO2 emissions; Electricity trade; Power market dynamics; Power generation mix; Transmission expansion JEL Classifications: Q43, Q4