Evaluering av energileddet i sentralnettstariffen og bruk av marginaltapssatser

I denne rapporten foretar vi en evaluering av energileddet i sentralnettstariffen og bruken av marginaltapssatser. Vi går først gjennom teorien for optimale overføringstariffer og beskriver hvordan marginaltapssatser beregnes og hvordan disse benyttes i kombinasjon med systempris i dagens nettariff. Vi beskriver også utviklingen i den svenske marginaltaps-tariffen, og vi refererer helt kort utviklingen i PJM-området (USAs østkyst). Ettersom det svenske og det norske systemet tilsynelatende er basert på samme prinsipper, problematiserer vi mangelen på harmonisering, ettersom systemene rent faktisk nå er svært forskjellige. Det er liten tvil om at Statnett har forfinet og forbedret metodene for å beregne marginaltapssatser, samtidig som at flaskehalser fremdeles håndteres ganske forenklet gjennom få og store prisområder på Nord Pool Spot. Vi diskuterer sammenhengen mellom tapstariffen og flaskehalshåndtering, og vi anbefaler at Statnett vurderer å bruke områdepris som avregningspris. Dette vil gjøre det mye enklere for aktørene å ta hensyn til tapskostnadene

Congestion management in the Nordic power market : nodal pricing versus zonal pricing

In the Nordic day-ahead electricity market zonal pricing or market splitting is used for relieving congestion between a predetermined set of price areas. This congestion management method represents an aggregation of individual connection points into price areas, and flows in the actual electricity network are only partially represented in the market clearing. Because of several strained situations in the power system during 2009 and 2010, changes in the congestion management method are under consideration by the Norwegian regulator NVE. We discuss three different congestion management methods – nodal pricing, and optimal and simplified zonal pricing. Four hourly cases from 2010 are used to illustrate the effects of different congestion management methods on prices, surpluses and network utilization

Weight restrictions in the DEA benchmarking modul for Norwegian electricity distribution companies : size and structural variables

We have previously, in report 33/08, looked at possible weight restrictions for the so-called “geography” variables in the DEA model for the distribution networks. In this report we consider weight restrictions for the remaining output variables. Because some cost drivers are represented by proxy variables, in some cases endogenous input variables, the resulting shadow prices are difficult to interpret. Weight restrictions that rely on detailed assumptions about individual prices, such as the proposal in NVE (2008), are therefore problematic. We suggest instead virtual weight restrictions with respect to groups of variables, thereby eliminating the need for detailed assumptions. The virtual restrictions were introduced in report 33/08, and we discuss here how to set the restriction limits. Since one of the main motivations for considering weight restrictions is to limit the effect of the geography variables, we compare the weight restricted model to a two-stage DEA approach where the geography variables are included in the second stage. We also make comparisons with the procedure used by NVE to limit super efficiency

Stochastic Electricity Dispatch: A challenge for market design

We consider an electricity market with two sequential market clearings, for instance representing a day-ahead and a real-time market. When the first market is cleared, there is uncertainty with respect to generation and/or load, while this uncertainty is resolved when the second market is cleared. We compare the outcomes of a stochastic market clearing model, i.e. a market clearing model taking into account both markets and the uncertainty, to a myopic market model where the first market is cleared based only on given bids, and not taking into account neither the uncertainty nor the bids in the second market. While the stochastic market clearing gives a solution with a higher total social welfare, it poses several challenges for market design. The stochastic dispatch may lead to a dispatch where the prices deviate from the bid curves in the first market. This can lead to incentives for selfscheduling, require producers to produce above marginal cost and consumers to pay above their marginal value in the first market. Our analysis show that the wind producer has an incentive to deviate from the system optimal plan in both the myopic and stochastic model, and this incentive is particularly strong under the myopic model. We also discuss how the total social welfare of the market outcome under stochastic market clearing depends on the quality of the information that the system operator will base the market clearing on. In particular, we show that the wind producer has an incentive to misreport the probability distribution for wind

Overview, roles, and performance of the North East Atlantic fischeries commission (NEAFC)

According to the 1995 United Nations Fish Stocks Agreement (UNFSA), straddling fish stocks and highly migratory fish stocks are to be managed by Regional Fisheries Management Organisations (RFMOs), consisting of coastal states and relevant Distant Water Fishing Nations (DWFNs). In the North East Atlantic there are several straddling stocks, including herring, mackerel, blue whiting, redfish and numerous deep sea stocks that are exploited both within coastal states’ 200 mile Exclusive Economic Zones and on the high seas. Management of such stocks poses special management problems. In this area, the North East Atlantic Fisheries Commission (NEAFC) represents the relevant RFMO. So far the literature has devoted little attention to RFMOs in general and to NEAFC in particular. The purpose of this report is, first, to provide an overview of the organisation, structure, and objectives of NEAFC and, second, to consider its performance with regard to resource management

Guarantees of Origin and Competition in the Spot Electricity Market

We study the effect of introducing a market for green energy attributes on the market for the energy itself. In Europe, renewable energy producers receive Guarantees of Origin (GOs) that they can sell to consumers who wish to declare their electricity consumption as “green”. In a model of price competition, we show how the introduction of such a GO market can increase competition in the spot electricity market, leading to reduced electricity prices. In the current market design, the trade of GOs is not restricted by the physical transmission capacity in the spot electricity market. However, since the production capacity of GOs is still limited by the total dispatch of electricity, suppliers have incentives to compete more fiercely in the spot market. This pro-competitive effect disappears if the physical transmission capacity is also imposed on the GO market

International management of North Sea herring

North Sea herring is a transboundary resource, shared by the EU and Norway. The purpose of this paper is to investigate how the harvests or total allowable catch quotas (TACs) for this species should be divided between these two countries so that both parties are satisfied. We apply a discrete-time game-theoretic model in which we show that the EU should be allocated more than half of the TAC even if the EU has higher harvesting costs. This result is due to the distribution pattern of the herring, with a larger share of herring located in the EU zone. However, we find that according to the Nash bargaining solution, the current sharing allocates too large a share to the EU

End-User Flexibility in the Local Electricity Grid – Blurring the Vertical Separation of Market and Monopoly?

In the Norwegian electricity system, new consumption patterns and changing load profiles increase an already apparent need for reinvestment in the aging network infrastructure. This is very costly, and network operators consider alternative ways of increasing capacity, which are less costly and more flexible. One such option is end-user flexibility. In the paper, we give an overview of the Norwegian electricity market and regulation and the potential of end-user flexibility. We present an investment case provided by a network company, which illustrates that the choice of compensation method to customers have a large impact on the cost and/or revenue cap in the regulatory model. By issuing direct payments for flexibility services, end-user flexibility results in a lower efficiency, although the revenue cap may be higher, while redistribution of network tariffs have a marginal effect on efficiency and the revenue cap. Through redistribution of network tariffs, the network operator can defer investments without a notable change in the revenue cap or change in efficiency. This highlights some of the future challenges that the regulator faces in setting a regulatory framework for end-user flexibility and it challenges the vertical separation that has been a corner stone in the deregulated electricity market

Cooperative and non-cooperative management of the northeast atlantic cod fishery

The fishery for Northeast Atlantic cod (Gadus morhua) in the Barents Sea is one of the most valuable fisheries in the North Atlantic. After the introduction of Extended Fisheries Jurisdiction, cod is a shared stock between Norway and Russia. Overfishing of quotas has been a concern for a number of years. The purpose of this article is to analyse cooperative and non-cooperative management of the Northeast Atlantic cod fishery. This will be done in a game theoretic context, based on different assumptions regarding important variables such as cost of effort and initial stock size. The game theoretic analysis will be based on an empirical bioeconomic model developed and estimated by Hannesson (2007, 2010). The case of cooperative management is analysed for different cost parameters and starting values of the stock. An interesting result is that the optimal policy gives rise to pulse fishing. As this involves effort (and harvests) varying from year to year, potentially imposing substantial social costs on the industry in years when the fishery is closed, a policy of constant effort is also considered. Finally, non-cooperative management is analysed

The development of a new farmed species : production technology and markets for turbot

Turbot (Scophthalmus maximus) is a high value fish that is much favoured in many market segments such as white tablecloth restaurants. Aquaculture of turbot started first in Scotland in the 1970s, but from the early 1980s the expansion in production volume and number of farms took place in Galicia, Spain. Still the main production takes place in Galicia with modest culture in France, Portugal, Denmark, Germany, Iceland, Ireland, Italy, Norway and Wales. This picture may change due to plans for substantial expansion of production in Portugal. As a consequence, aquaculture’s share of the market will dominate compared to the contribution from the wild fishery. The purpose of this report is to analyse current developments and make a forecast of future trends in turbot production and markets. There are important developments in farming technology that may impact on future supply and cost of production. On this background, we will analyse the future sustainability of turbot farming from a technological as well as economic point of view