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

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

Assessment of climate change mitigation and adaptation in cities

Cities are faced with a number of sustainability challenges in the context of climate change. There is an urgent need to limit greenhouse gas emissions from cities if ambitious mitigation targets are to be met. Meanwhile, cities are vulnerable to the impacts of climate change unless adaptation plans can be put in place. The need to connect climate change adaptation and mitigation with broader assessment of sustainability is becoming increasingly recognised. This paper describes an urban integrated assessment facility developed by the Tyndall Centre for Climate Change Research, which simulates socio-economic change, climate impacts and greenhouse gas emissions over the course of the twenty first century at the city scale. The urban integrated assessment facility adopts a broad-scale systems approach to urban development and sustainability assessment. It incorporates a multi-sectoral model of the regional economy, hierarchical city-scale spatial interaction model and modules for assessment of climate impacts, adaptation options and greenhouse gas emissions. The paper demonstrates how the urban integrated assessment facility quantifies synergies and conflicts between adaptation to climate change and mitigation of greenhouse gas emissions in order to improve decision making and facilitate the development of portfolios of planning policies that together have a realistic prospect of achieving sustainable outcomes for cities