Impact of Carbon Prices on Wholesale Electricity Prices and Carbon Pass-Through Rates in the Australian National Electricity Market

Wild, Phillip; Bell, William Paul; Foster, John

doi:10.5547/01956574.36.3.pwil

Cited by 31 publications

(11 citation statements)

References 18 publications

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“…High levels of Variable Renewable Energy (VRE) amplifies and complicates matters, because historically such plant have been subsidised in certificate 'side-markets' and priority dispatched (Nelson et al 2012;Joskow, 2013;Newbery, 2015;. Given negligible marginal running costs, merit-order effects arising from VRE became apparent in markets such as Germany as early as 2008 (Sensfuβ et al 2008) and had been prominent in the SA region of the NEM (Forrest and MacGill (2013;Cludius et al 2014;Bell et al 2015;Bell et al 2017).…”

Section: 1mentioning

confidence: 99%

“…1999a, 1999bNelson et al 2010;Simshauser & Tiernan 2018 via a statebased national ETS scheme (see NETT, 2006;Nelson et al 2010;Jones, 2014) and again from 2008-2010 (see Buckman & Diesendorf, 2010;Garnaut, 2014). On the fourth attempt the policy development cycle from 2011-2012 was implemented and a carbon tax transitioning to an ETS was implemented from 2012-2014 only to be killed off following a general election and change of government in 2013 (see Freebairn, 2014;Wild et al 2015). Three further attempts have since been initiated; an Emissions Intensity Scheme in 2016 (see Simshauser & Tiernan, 2018), a Clean Energy Target in 2017 (see Finkel, 2017;) and a National Energy Guarantee from 2018 with this latter policy development cycle still on-foot with tentative bi-partisan support (see ESB, 2018).…”

Section: 2mentioning

confidence: 99%

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Missing money, missing policy and Resource Adequacy in Australia's National Electricity Market

Simshauser

2019

Utilities Policy

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Section: 1mentioning

confidence: 99%

Section: 2mentioning

confidence: 99%

Missing money, missing policy and Resource Adequacy in Australia's National Electricity Market

Simshauser

2019

Utilities Policy

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“…The pass-through coefficient β has been the subject of some recent studies. Using different econometric techniques, Sijm et al (2006), Bunn and Fezzi (2007), Zachmann and von Hirschhausen (2008), Fabra and Reguant (2014), Wild et al (2015), and Hintermann (2016) find empirical evidence of pass-through of allowance costs in numerous electricity markets. This literature shows that there is potential for high levels of pass-through of allowance costs.…”

Section: Energy-only Markets and The Merit Order Curvementioning

confidence: 99%

Renewables, Allowances Markets, and Capacity Expansion in Energy-Only Markets

Falbo¹,

Pelizzari²,

Taschini³

2019

The Energy Journal

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We investigate the combined effect of an Emissions Trading System (ETS) and renewable energy sources on investments in electricity capacity in energy-only markets. We study the long-term capacity expansion decision in fossil fuel and renewable technologies when electricity demand is uncertain. We model a relevant tradeoff: a higher share of renewable production can be priced at the higher marginal cost of fossil fuel production, yet the likelihood of achieving higher profits is reduced because more electricity demand is met by cheaper renewable production. We illustrate our theoretical results comparing the optimal solutions under a business-as-usual scenario and under an ETS scenario. This illustration shows under which limiting market settings a monopolist prefers to withhold investments in renewable energy sources, highlighting the potential distortionary effect introduced via an ETS. Our conclusions remain unaltered under varying key modelling assumptions.

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“…utility scale (Jones 2009;MacGill 2010;Buckman and Diesendorf 2010;Nelson et al 2013) and iv). the carbon tax from 2012-2014 (Freebairn, 2014;Wild et al 2015). At their peak, environmental schemes added 15% to an already sharply rising tariff (Simshauser & Downer, 2016).…”

Section: Electricity Price Increasesmentioning

confidence: 99%

Price discrimination and the modes of failure in deregulated retail electricity markets

Simshauser

2018

Energy Economics

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In Australia, as with Great Britain, governments have shown rising concern with the health of competitive residential electricity markets. A core concern is the practice of price discrimination and the rising dispersion of prices. The State of Queensland implemented Full Retail Contestability in 2007, but held a regulated price cap in place until 2016, when it finally deregulated its residential electricity market. Almost simultaneously, the two jurisdictions that pioneered retail price deregulation, Great Britain and Victoria, were questioning their prior policy decision. Queensland makes for a fascinating case study because Southeast Queensland comprises a fully deregulated retail market while Regional Queensland is a regulated monopoly-with common input costs across both zones. Consequently, a regulated monopoly with a uniform tariff and 640,000 customers forms a very large control group, which can be directly compared to the competitive market of more than 1.3 million customers-making such analysis globally unique. Analysis of Queensland market conditions concludes the policy is welfare enhancing. To be clear, rising electricity prices are a problem, but price discrimination is not. The deregulated competitive market is, perhaps unsurprisingly, better at regulating the overall average tariff and consumer welfare has been enhanced by $184 million per annum-with some consumer segments very materially better off. However, certain modes of failure remain, viz. an inter-consumer misallocation problem and lack of transparency vis-à-vis the anchoring of discounts-known as the "discounts off what?" problem. Resolving the inter-consumer misallocation problem is relatively straight forward via ensuring energy retailers (voluntarily) move vulnerable customers onto a Benchmark-equivalent or suitably discounted tariff. Due to the non-linearity of tariffs and the rising mix of discrete metered loads, the latter can be best solved by producing a weighted average of Standing Offers, and using this as the benchmark. Cambridge Working Papers in Economics Faculty of Economics www.eprg.group.cam.ac.uk Price discrimination and the modes of failure in deregulated retail electricity markets EPRG Working Paper 1827

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Impact of Carbon Prices on Wholesale Electricity Prices and Carbon Pass-Through Rates in the Australian National Electricity Market

Cited by 31 publications

References 18 publications

Missing money, missing policy and Resource Adequacy in Australia's National Electricity Market

Missing money, missing policy and Resource Adequacy in Australia's National Electricity Market

Renewables, Allowances Markets, and Capacity Expansion in Energy-Only Markets

Price discrimination and the modes of failure in deregulated retail electricity markets

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