Myths and facts of the utility death spiral

Castañeda, Mónica; Jímenez, Maritza; Zapata, Sebastián; Franco, Carlos; Dyner, Isaac

doi:10.1016/j.enpol.2017.07.063

Cited by 87 publications

(23 citation statements)

References 39 publications

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“…Although efforts to analyze this country have been previously made by focusing on the transformative effect of distributed solar PV in the country's power industry, the country remains largely unexplored in this regard [25][26][27]. Further, Colombia is an interesting case study as it has a high solar potential, with the average solar radiation measuring 4.5 kWh/m 2 /day [29,30,45,46]. Additionally, the government has taken an important step in supporting the development of renewable energies through Law 1715 [47].…”

Section: Literature Reviewmentioning

confidence: 99%

“…However, research relating to nonindustrialized countries is limited. This is particularly the case for the Colombian electricity market, although efforts have been previously made focusing on the transformative effect of distributed solar PV on the country's power industry [29][30][31]. The objective of this paper was therefore to assess different policies to promote solar PV investment in the Colombian residential sector.…”

Section: Introductionmentioning

confidence: 99%

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Assessing the Effect of Incentive Policies on Residential PV Investments in Colombia

Castañeda¹,

Zapata²,

Aristizábal³

2018

Energies

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As the cost of solar photovoltaic (PV) falls, their potential for transforming modern electricity generation increases. Solar PV provides a simpler way of producing clean and affordable energy, which makes it an attractive investment. Great investments in solar PV have occurred in industrialized countries, but government efforts to promote this technology have not been effective in nonindustrialized countries. Despite this, some of these countries may have a high solar PV potential, such as Colombia, where policies to encourage solar PV are only just starting to take place. Therefore, this paper proposes a simulation model to assess different policies—feed-in tariff, net metering, and capital subsidy—to promote solar PV investments in the Colombian residential sector. Policies are assessed considering the criteria of efficiency and effectiveness. Simulation results suggest that (i) net metering is the most efficient policy with a cost indicator of 20,298 USD/MW; (ii) feed-in tariff is the most effective policy as it reaches the highest level of avoided CO2 emissions—4,792,823 million tons of CO2—and a meaningful PV installed capacity of 7522 MW; (iii) capital subsidy is the least efficient policy as it has the highest cost indicator of 509,616 USD/MW.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Assessing the Effect of Incentive Policies on Residential PV Investments in Colombia

Castañeda¹,

Zapata²,

Aristizábal³

2018

Energies

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“…This can hamper the public acceptance of these innovations. Moreover, some even envision a possible "death spiral scenario" [17,18,19,20], where higher network tariffs will be charged to poorer customers, which eventually threatens to collapse the whole electricity supply system. Other recent studies (see e.g.…”

Section: Introductionmentioning

confidence: 99%

Exploring the impact of network tariffs on household electricity expenditures using load profiles and socio-economic characteristics

Azarova¹,

Engel²,

Ferner³

et al. 2018

Nat Energy

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Growing self-generation and storage are expected to cause significant changes in residential electricity utilization patterns. Commonly applied volumetric network tariffs may induce imbalance between different groups of households and their respective contribution to recovering the operating costs of the grid. Understanding consumer behaviour and appliance usage together with socioeconomic factors can help regulatory authorities to adapt network tariffs to new circumstances in a fair way. We assess the effects of eleven 1 network tariff scenarios on household budgets using real load profiles from 765 households. Thus we explore the possibly disruptive impact of applying peak-load-based tariffs on the budgets of households when they have been mainly charged for consumed volumes before. Our analysis estimates the change in household network expenditure for different combinations of energy, peak, and fixed charges and can help to design tariffs that recover the costs needed for the sustainable operation of the grid.

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“…Without systemic interventions, these changes financially threaten the current utility business models (Castaneda et al, 2017), while technically during the transitional stages they may challenge the reliability of electrical systems and societal welfare.…”

Section: Changing Landscape Of the Energy Sector: Challenges And Opportmentioning

confidence: 99%

“…While that is a 19% increase compared to 2016, there is no clear indication that consumption will increase further or the trend of 2005-2012 would be repeated when the household NG consumption steadily decreased. 30 There are differences between natural gas pricing logic and the making of the electricity rate. There is only one quality (type) of natural gas defined: 'pipeline quality' and this is determined by the applicable regulation of the given country.…”

Section: Value Chain Of Natural Gasmentioning

confidence: 99%

Exploring Trade-offs in the Hungarian Renewable Energy Market

Herczeg¹

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While there are several research projects on the Hungarian renewables market, until now only partial aspects of the RES-related trade-offs of the Hungarian energy market have been recognized. Due to the size and the diversity of the industry, the research has focused on one particular problem set (e.g., technology, value chain, strategy, regulatory) and only has a glimpse of some of the trade-offs. To develop the comprehensive list of the relevant RES trade-offs in Hungary we aimed to reach a common understanding across the industry actors. Hence, we used concept mapping as a mixed method and relied on the inputs of 42 respondents, who were stakeholders in the energy value chains. In the iterative process, 40 statements became part of the ‘reduced list of statements’ that consisted of the actions and the trade-offs. The statements were then evaluated by the participants. With hierarchical cluster analysis the five-cluster solution was identified as the best fit and then their labeling was discussed by the respondents. The 5 labeled and ranked clusters were: 1) Low level strategy (regulations, pricing, complexity management) (3,35/5) 2) High-level strategy (regulatory, tariff system, cooperations) (3,29/5) 3) Infrastructure development (technology, PR) (3,19/5) 4) Network optimization (network operation, resource management) (3,11/5) 5) Social aspects (stakeholder impact) (2,20/5) The linear correlation coefficients between the various subgroups were very high. Comparisons were made of industry experience (‘Juniors’, 'Mid-level', ‘Seniors’), type of affiliation (‘State controlled’, ‘Not state controlled’) and qualification (‘Economics and Management’, ‘JD’). Overall the respondent group had a strong agreement on the importance of the factors with a same trend in all cases. With the ladder graphs in almost all cases some potential disagreements could be identified. The suggested utilization of the results: 1) Inputs for relevant stakeholders to prioritize between RES technologies (e.g., National Energy Strategy). 2) Guide for in-house strategy and decision-making, a practical 'check list' for industry experts when RES-related complex technical-, legal- and economic problems are analyzed. 3) A formalized, in-depth discussion framework on the challenges (and trade-offs) of the Hungarian RES market for further research. With the case study methodology we found that: 1) the national public utility service provider (former ENKSZ / current NKM) is not even five years old but already has a ‘long’ and thought-provoking history. 2) NKM was created with strong state support and by increasing market concentration. Economies of scale and lack of competition allows NKM to start to change its strategy from cost leadership to product differentiation including the support of RES technologies and electric vehicles. 3) the strategic focus shift of NKM towards ‘customer intimacy’ and even ‘product leadership’ could promote RES solutions or ease many of the pressing trade-offs. 3 From the customer’s point of view the change in value discipline could be beneficial. However, the state’s expectation for affordable energy (‘operational excellence’) is present, which is potentially strategic and a supply chain risk is present. Finally, on the basis of this dissertation we suggest the further research directions i) the RES trade-offs on the high and low strategy levels, ii) the application of concept mapping for relevant energy industry issues and iii) to explore the increased state-ownership effect on RES development. This research focused on Hungary, the Hungarian renewable energy market and the inherent policy trade-offs related to the dynamically changing desirable energy mix of this country. Our respondents are among the primary influencers of decisions in the Hungarian energy sector; they do know the causal links and the whys behind the actions. Consequently, this study has very high internal validity (the extent to which we can infer that a relationship between two variables is causal), the representations given show valid causal linkages. Additionally, we can argue - in the spirit of Donald T. Campbell’s Proximal Similarity Model, which is just a different name for external validity (generalizability to other settings) - that the Hungarian situation is not unique, the neighboring countries, particularly the Czech Republic, Poland and Slovakia (the Visegrád Group), are very much in the same boat with Hungary. These countries face similar challenges regarding energy strategy (e.g., finding the proper RES technology within their energy mix), network development and optimization (e.g., cross border capacities, balancing north-south power loads) and social issues (e.g., controversies of the coal industry). So, the results presented here have external validity and are, to a varying extent, applicable to these countries.

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Myths and facts of the utility death spiral

Cited by 87 publications

References 39 publications

Assessing the Effect of Incentive Policies on Residential PV Investments in Colombia

Assessing the Effect of Incentive Policies on Residential PV Investments in Colombia

Exploring the impact of network tariffs on household electricity expenditures using load profiles and socio-economic characteristics

Exploring Trade-offs in the Hungarian Renewable Energy Market

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