Three Essays On Empirical Analysis Of United States Electricity Markets
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Three Essays On Empirical Analysis Of United States Electricity Markets
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Author : Suman Gautam
language : en
Publisher:
Release Date : 2014
Three Essays On Empirical Analysis Of United States Electricity Markets written by Suman Gautam and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
In this Dissertation, three independent studies analyze the impact of recent changes in both supply and demand sides of the U.S. electricity sector. Below is a brief description of three essays. I. Coal Plant's Response to Renewable Portfolio StandardsRenewable Portfolio standards require load-serving entities to purchase a given percentage of their electricity sales from eligible renewable energy technologies. This study analyzes the impact of RPS on the coal utilization by coal plants of Pennsylvania, New Jersey, and Maryland (PJM) electricity market. We develop a panel dataset of 259 unique PJM coal-fired utility plants' integrating their fuel purchases with state-level RPS energy mandates, electricity prices, and fuel prices from 2001 to 2011, covering both pre-RPS and post-RPS era. Since selection of RPS policies may be non-random, we employ a two-step Heckit model to control for states' decision to adopt an RPS and choose yearly RPS levels. The results show that a percentage point increase in state's yearly energy target increases the average plant's coal purchase by 45 thousand tons. These results are approximately consistent across selection-corrected models. The analysis showing the positive impact of RPS yearly targets on PJM coal plants' coal purchases suggests a few things. There are fewer coal plants operating at the margin. Moreover, RPS yearly energy targets are fairly low at present; they are scheduled to increase considerably in coming years. Renewable Portfolio Standards may decrease the amount of fuel utilized by coal plants when RPS mandates increase in future. II. Residential Customers Response to Critical Peak Events of Electricity: Green Mountain Power ExperienceDemand response (DR) programs, usually through peak pricing and incentive-based approaches, can encourage customers to reduce or shift consumption during peak periods. This benefits utilities by lowering short-run generation costs and reducing the need for some long-run peak-driven investments. This paper analyzes the impact of Vermont's Green Mountain Power's (GMP) emergency DR programs on residential customers' electricity consumption during a two-year pilot study program in 2012--2013. The 3,735 single-home residents of Central Vermont area were separated into six treatment groups and two control groups resulting into 26 million hourly load observations during the period of the study. Our analysis shows that incentive-based demand response programs have statistically significant impacts on reducing peak load. Specifically, CPR rates reduced peak load usage 6% to 7.7% and CPP rates reduced peak load between 6.8% and 10.3% during critical peak events. Moreover, on average, IHD-equipped participants' monthly energy consumption was 2.0% to 5.3% lower than the monthly energy usage of non-IHD customers. However, none of the CP rate and IHD treatments induced a persistent response across multiple critical events and none of the treatment groups exhibited a consistent response to critical peak events. Based on our evaluation of GMP's DR programs during 2012 and 2013, neither critical peak pricing nor rebates are themselves sufficient to substitute for new capacity to meet resource adequacy requirements.III. Analysis of Load and Price patterns in the U.S. Electricity SectorThe study analyzes hourly electricity loads and marginal costs of electric entities with of extreme value theory (EVT), a concept widely used in the financial sector. For each year's hourly data of balancing authorities and utilities, we fit generalized extreme value (GEV) distribution and estimate the parameters of the distribution with an aim of comparing how these parameters have changed over time and market regions. We also account for the time dependencies, seasonalities, and near-time clustering present in the electricity markets -- both for electricity load and prices -- with the help of autoregressive conditional hetereskedastic models. The results show that the distributions of hourly load and lambda values are fat tailed. Hourly lambda values have more extreme values generating fatter tails than hourly electricity load. We also show that extreme tail quantiles estimated with the GEV parameters at different percentile levels are comparable with the percentiles of actual observations.
Essays On Empirical Analysis Of Multi Unit Auctions Impacts Of Financial Transmission Rights On The Restructured Electricity Industry
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Author : Hailing Zang
language : en
Publisher:
Release Date : 2005
Essays On Empirical Analysis Of Multi Unit Auctions Impacts Of Financial Transmission Rights On The Restructured Electricity Industry written by Hailing Zang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with categories.
This dissertation uses recently developed empirical methodologies for the study of multi-unit auctions to test the impacts of Financial Transmission Rights (FTRs) on the competitiveness of restructured electricity markets. FTRs are a special type of financial option that hedge against volatility in the cost of transporting electricity over the grid. Policy makers seek to use the prices of FTRs as market signals to incentivize efficient investment and utilization of transmission capacity. However, prices will not send the correct signals if market participants strategically use FTRs. This dissertation uses data from the Texas electricity market to test whether the prices of FTRs are efficient to achieve such goals. The auctions studied are multiunit, uniform-price, sealed-bid auctions. The first part of the dissertation studies the auctions on the spot market of the wholesale electricity industry. I derive structural empirical models to test theoretical predictions as to whether bidders fully internalize the effect of FTRs on profits into their bidding decisions. I find that bidders are learning as to how to optimally bid above marginal cost for their inframarginal capacities. The bidders also learn to bid to include FTRs into their profit maximization problem during the course of the first year. But starting from the second year, they deviated from optimal bidding that includes FTRs in the profit maximization problems. Counterfactual analysis show that the primary effect of FTRs on market outcomes is changing the level of prices rather than production efficiency. Finally, I find that in most months, the current allocations of FTRs are statistically equivalent to the optimal allocations. The second part of the dissertation studies the bidding behavior in the FTR auctions. I find that FTRs' strategic impact on the FTR purchasing behavior is significant for large bidders - firms exercising market power in the FTR auctions. Second, trader forecasts future FTR credit very accurately while large generators' forecasts of future FTR credit tends to be biased upward. Finally, The bid shading patterns are consistent with theoretical predictions and support the existence of common values.
Three Essays On Energy Economics
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Author : Louis Demetri Preonas
language : en
Publisher:
Release Date : 2018
Three Essays On Energy Economics written by Louis Demetri Preonas and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
Electricity powers the modern economy, and the electricity supply chain is notoriously complex. Power plants must develop stable relationships for fuel procurement, as their long-run profitability hinges on securing a cheap, reliable fuel supply. Electric utilities may also lack the incentive to provide a reliable power supply to all potential customers, which could hamper economic productivity. The physical properties of electricity transmission create inherent challenges in providing power to all regions of the grid, while simultaneously incentivizing economically efficient production decisions. In this dissertation, I study three potential market failures in electricity supply: (i) market power in U.S. coal transportation; (ii) under-electrification of India’s rural poor; and (iii) short-run allocative inefficiencies in Indian electricity dispatch. In each case, my findings are of substantial economic importance due the scale of the electric power industry, which is essential to virtually all economic activity. Climate change only raises the stakes, and alleviating electricity market failures has the potential to increase carbon dioxide emissions and further harm the planet. In the first chapter, I investigate how market power in the transportation of coal might impact U.S. climate policies. Economists have widely endorsed pricing CO2 emissions to internalize climate change-related externalities. Doing so would significantly affect coal, which is the most carbon-intensive major energy source. However, U.S. coal markets exhibit an additional distortion, as the railroads that transport coal to power plants can exert market power. This upstream distortion can mute the price signal of a corrective tax, due to changes in markups or incomplete tax pass-through. I provide the first empirical estimates of how coal-by-rail markups respond to changes in coal demand. I find that rail carriers reduce coal markups when downstream power plant demand changes, due to a decrease in the price of natural gas (a competing fuel). I estimate markup changes that vary substantially across coal plants, resulting from a combination of heterogeneous transportation market structure and plant-specific demand shocks. Since low natural gas prices and a CO2 emissions tax similarly disadvantage coal, observed decreases in coal markups imply that pass-through of a federal carbon tax to coal power plants may be heterogeneous and incomplete. This could substantially erode the environmental benefits of a price-based climate policy. My results suggest that decreases in coal markups have increased recent climate damages by $2.3 billion, compared to a counterfactual where markups do not change. In the second chapter, coauthored with Fiona Burlig, we study the impacts of energy access in the developing world. Over 1 billion people still lack electricity access. Developing countries are investing billions of dollars in rural electrification, targeting economic growth and poverty reduction, despite limited empirical evidence. We estimate the effects of rural electrification on economic development in the context of India’s national electrification program, which reached over 400,000 villages. We use a regression discontinuity design and high-resolution geospatial data to identify medium-run economic impacts of electrification. We find a substantial increase in electricity use, but reject effects larger than 0.26 standard deviations across numerous measures of economic development, suggesting that rural electrification may be less beneficial than previously thought. In the third chapter, coauthored with Fiona Burlig and Akshaya Jha, we examine short-run allocative inefficiencies in Indian electricity supply. Electricity consumption is highly correlated with economic development. Understanding and resolving the drivers of economic inefficiencies in electricity markets is critical to supporting economic growth. We quantify the costs of short-run misallocation in Indian electricity supply. We assemble a novel dataset on daily production from each utility-scale power plant in the country and administrative measures of plant-specific marginal operating costs, and calculate the total variable costs of electricity generation in India to be approximately $29 billion per year. We next construct the “least-cost” counterfactual where we dispatch power plants in order of lowest-to-highest marginal cost. We find that this least-cost dispatch results in total annual operating costs that are roughly $4.7 billion lower than observed dispatch. Once we account for transmission constraints, we find a remaining misallocation wedge of $3.2 billion per year. We find evidence that this wedge results from market design and political economy considerations, but find little evidence of market power.
Three Essays On Empirical Asset Pricing
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Author : Wenqing Wang
language : en
Publisher:
Release Date : 2004
Three Essays On Empirical Asset Pricing written by Wenqing Wang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Investments categories.
Essays In Electricity Economics
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Author : Brittany L. Tarufelli
language : en
Publisher:
Release Date : 2019
Essays In Electricity Economics written by Brittany L. Tarufelli and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with Climatic changes categories.
Goods markets are designed and regulated at a sub-global level. Although it’s typical to assume one set of market clearing rules across regulated and unregulated regions, trade occurs across a patchwork of sub-global market designs. Not accounting for this heterogeneity in market design can lead to unanticipated outcomes from sub-global regulations, as correcting for one market failure–such as a negative externality from carbon emissions–can lead to another market failure from the market design itself when trade occurs across differing market designs. The anatomy of this second-best problem is considered in the context of U.S. electricity markets, as market clearing mechanisms vary by region, and they imperfectly overlap with state-level climate policies such as carbon prices and renewables subsidies. In Chapter I, I present a review of the theoretical and empirical literature on electricity market design and its interaction with regional climate policies. In the wholesale electricity sector, market design drives both the extent of the forward contract market and the competitiveness of the spot market, which can induce strategic behavior and affect both market and regional climate policy outcomes. Assessing climate policy outcomes under only the assumption of a centralized market design, as is customary in the literature, belies the complexity of electricity market design, which varies regionally. As there is currently an agenda to link regional electricity markets, there is also a need to study how strategic behavior across differing market designs affects emissions when regional climate policies are imposed. In Chapter II, I develop a two-stage model of oligopolistic electricity production to determine if strategic behavior in forward contract and spot markets across differing electricity market designs increases or decreases emissions leakage from regional climate policies. I find that under uncertainty from demand and renewable resource shocks, centralized market designs generally reduce market power through arbitraging away price risk between forward and spot markets. However, under an asymmetric carbon cap and trade program, resulting emissions leakage is decreased by bilateral markets, which act as a structural backstop to emissions leakage. Emissions leakage increases when bilateral markets trade with, or are integrated with centralized markets, potentially reducing the efficacy of regional climate policies. In Chapter III, I study the interaction between sub-global climate policy and sub-global design of goods markets using an example of market expansion from wholesale electricity markets–the Western Energy Imbalance Market (EIM) in California. Using a difference-in-differences and triple-differences framework with matching to account for self-selection, I investigate how the EIM affects emissions leakage from California’s carbon cap and trade program. I find that the EIM caused a modest increase in emissions leakage into participating regions outside California, despite the relatively small trading volumes. The results have implications for ongoing efforts to expand competitive wholesale electricity markets across regions with differing climate policies. The results of this dissertation are informative for sub-global climate policy when trade in goods markets occurs across regions with different market clearing rules. Specifically, reduced transactions costs in trade between regulated and unregulated regions may tend to exacerbate emissions leakage. These results are informative in the context of continuing changes in wholesale electricity markets, including potential market expansions and continued integration of regional electricity markets across the U.S. and the European Union.
Three Essays On Making Electric Power Markets
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Author : Brian Thomas Kench
language : en
Publisher:
Release Date : 2000
Three Essays On Making Electric Power Markets written by Brian Thomas Kench and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000 with categories.
Three Essays On Price Dynamics And Causations Among Energy Markets And Macroeconomic Information
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Author : Sung Wook Hong
language : en
Publisher:
Release Date : 2013
Three Essays On Price Dynamics And Causations Among Energy Markets And Macroeconomic Information written by Sung Wook Hong and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
This dissertation examines three important issues in energy markets: price dynamics, information flow, and structural change. We discuss each issue in detail, building empirical time series models, analyzing the results, and interpreting the findings. First, we examine the contemporaneous interdependencies and information flows among crude oil, natural gas, and electricity prices in the United States (US) through the multivariate generalized autoregressive conditional heteroscedasticity (MGARCH) model, Directed Acyclic Graph (DAG) for contemporaneous causal structures and Bernanke factorization for price dynamic processes. Test results show that the DAG from residuals of out-of-sample-forecast is consistent with the DAG from residuals of within-sample-fit. The result supports innovation accounting analysis based on DAGs using residuals of out-of-sample-forecast. Second, we look at the effects of the federal fund rate and/or WTI crude oil price shock on US macroeconomic and financial indicators by using a Factor Augmented Vector Autoregression (FAVAR) model and a graphical model without any deductive assumption. The results show that, in contemporaneous time, the federal fund rate shock is exogenous as the identifying assumption in the Vector Autoregression (VAR) framework of the monetary shock transmission mechanism, whereas the WTI crude oil price return is not exogenous. Third, we examine price dynamics and contemporaneous causality among the price returns of WTI crude oil, gasoline, corn, and the S&P 500. We look for structural break points and then build an econometric model to find the consistent sub-periods having stable parameters in a given VAR framework and to explain recent movements and interdependency among returns. We found strong evidence of two structural breaks and contemporaneous causal relationships among the residuals, but also significant differences between contemporaneous causal structures for each sub-period. The electronic version of this dissertation is accessible from http://hdl.handle.net/1969.1/148354
Three Essays In Energy Economics
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Author : Dae-Wook Kim
language : en
Publisher:
Release Date : 2004
Three Essays In Energy Economics written by Dae-Wook Kim and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with categories.
Three Essays On Environmental Economics
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Author : Wensu Li
language : en
Publisher:
Release Date : 2021
Three Essays On Environmental Economics written by Wensu Li and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021 with categories.
This dissertation addresses three issues in environmental economics. The first chapter uses data from the United States to examine how extreme weather events, which are more frequent and severe because of climate change, affect people's work time and location. A key question in this chapter is the role of job flexibility, such as access to work-at-home arrangements or flexible schedules, in people's adaptation behavior. The empirical analysis shows that people with higher job flexibility can adapt more easily to extreme weather, implying that job flexibility might be an important tool for adapting to climate change. The second chapter considers the role of waste quality in the international waste trade for recycling. It presents a theoretical model of the vertical market structure in recycling and obtains the market equilibrium quality and quantity in the international recyclable market where the upstream waste collectors sell to the downstream recycling mills. Adding the quality dimension opens a new way to think about the pollution haven effect. The policy analysis shows that, when taking waste quality into account, changes in border policies may lead to counter-intuitive outcomes. The third chapter estimates the nonlinear relationship between household electricity consumption and household income. The purchase of new electrical appliances creates a discontinuous jump in electricity use which is partly why electricity consumption does not grow proportionally with income. Chapter 3 empirically verifies the positive jump with the purchase of common appliances and identifies air conditioners as a key driver behind the rapid growth of household energy consumption in China in the early 2010s.
Essays On Market Mechanism And Market Participants Bidding Behaviors In Electricity Market
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Author : Ning Zhang
language : en
Publisher:
Release Date : 2005
Essays On Market Mechanism And Market Participants Bidding Behaviors In Electricity Market written by Ning Zhang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with categories.