"Electrical Grid Regulatory Effectiveness with Regards to Electricity Reliability in the EU“
Master-Thesis Economics, JKUStefan Schmidinger
Supervising tutor:Prof. Christine Zulehner
Energieinstitut an der JKU
Linz, 6.Nov.2012
First Directive 96/92/EG of the European Parliament Amendment 2003 Directive 2003/54/EG of the European Parliament
Grid access to third parties Regulation about grid tariffs Unbundling
Motivation was/is the establishment of competition and prevention/neutralization of natural monopolies
Introduction: Liberalization of Energy Markets
2
Lots of theoretical evaluation about types of regulation
Almost no empirical evaluation
Anna Ter-Martirosyan, Oct. 2003, The Effects of Incentive Regulation on Quality of Service in electricity Markets, working paper
Motivation
3
4
No Regulation at all.
Rate of Return Regulations: costs (not just the costs which cannot be controlled by the system operator) are totally refunded plus some premium.
Costs * (1 + i) Incentive Regulations: Price Cap Regulations which do not provide
incentives to invest in the quality (in terms of outage avoidance or minimizing outage duration) of the grid. But provide an incentive to reduce costs.
1 + CPI – x
Regulations which also provide an incentive to improve performance.
1 + CPI – x – q
i = allowed profit (e.g. weighted average cost of capital); x = efficiency factor ;q = quality penalty
Determination of Regulations
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Determination of Regulations
Austria
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
No Regulation 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0
RoR 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 0 0 0 0 0 0 0
Incentive Regulation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1
Quality Standards 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Source: National Reports European Energy Regulators 2005-2011 & Frontier-Economics IWET Report 2011
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Is there a casual influence of the kind of regulation on the quality/performance of the electrical grid due to different incentives for the system operators?
Rate of Return Regulation leads to lower grid outages.
Evaluation of regulatory effectiveness!
Hypothesis:
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Dependant Variable:
Minutes lost per year and capita (1999-2010) excluding exceptional events [MinLost]
Unbalanced Panel:
19 countries
12 years
Dependant Variable
81 2 3 4 5 6 7 80
50
100
150
200
250
300
350
400
450
MinLost
AustriaBulgariaCzech RepublicDenmarkFranceGermanyGBHungaryIrelandItalyLithuaniaNetherlandsPolandPortugalSloveniaSpain
Time [ years]
outa
ge [
min
]
91 2 3 4 5 6 7 8 9
0
0.5
1
1.5
2
2.5
3
Log_MinLost
AustriaBulgariaCzech RepublicDenmarkFranceGermanyGBHungaryIrelandItalyLithuaniaNetherlandsPolandPortugalSloveniaSpain
Time [years]
outa
ge [
log(m
in)]
10
1 2 3 4 5 6 7 8
-200
-150
-100
-50
0
50
100
Diff_MinLost
AustriaBulgariaCzech RepublicDenmarkFranceGermanyGBHungaryIrelandItalyLithuaniaNetherlandsPolandPortugalSloveniaSpain
Time [years]
outa
ge d
iffere
ce t
o t
-1 [
min
]
Explanatory Variable
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Variablenname Range Einheit QuelleMIN MAX
energy_import_dependence 0 1 binär National Reports CEERlatitude_capital 0 90 Grad; Sekunden http://www.worldcaps.comGDP_Capita_t 0 70 Euro je Einwohner Eurostatpop_density 0 500 inhabitants/km² Eurostatel_price_industrie_cent 0 15 cent/kWh Eurostatel_price_domestic_consumer_cent 0 21 cent/kWh Eurostathgt_t 0 7 kKdEntry_Regulation 0 6 oecd Public_ownership 0 6 oecd Vertical_integratioon 0 6 oecd energy_intensity_to/euro 0 20 to Rohöleinheit pro 1000 Euro Eurostat
el_consumption_capita_mwh 0 10 mWh EurostatWind_Photo 0 35 % EurostatZentralwirtschaft 0 1strong_wind_days 0 269 ECA&D projectprecipitation_days_R10mm 0 78 Tage ECA&D projectconsecutive_dry_days 0 203 Tage ECA&D projectcold-spell-duration 0 88 Tage ECA&D projectwarm-spell-duration 0 104 Tage ECA&D projectsnow-days_5cm 0 216 Tage ECA&D projectZeit 0 11 Jahre
Fir
st
Ou
tco
me
s
12
Confidence intervals 95(90)%
13
2.5 3 3.5 4 4.5 5 5.5 60
2
4
6
8
10
12
ror incentive quality
marg
inal eff
ects
90% proof that Rate of Return leads to less outage than incentive regulation (even with quality standards)
In order to evaluate effectiveness of regulation grid tariffs would be necessary. (Which are not!)
First Conclusion
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Danke für Ihr Interesse!
Kontakt: Stefan Schmidinger
Energieinstitut an der Johannes Kepler Universität Linz
Altenberger Straße 69
4040 Linz
AUSTRIA
Tel: +43 70 2468 5656
Fax: + 43 70 2468 5651
e-mail: [email protected]
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