Working Papers

Selected working papers by team members

Variable Pricing and the Cost of Renewable Energy” Imelda, M. Roberts, M. Fripp, NBER working paper24712 (June 2018)

We evaluate the potential gains from dynamic pricing in high-renewable systems using a novel model of power supply and demand in Hawaii. We find that dynamic pricing increases social surplus from 8.5 to 23.4 percent in a 100 percent renewable power system. High renewable systems, including 100 percent renewable, are remarkably affordable.

Incentives for Information Provision: Energy Efficiency in the Spanish Rental Market” Bian, X. and N. Fabra CEPR Working Paper 13270 (October 2018)

We assess landlords incentives to obtain and disclose energy efficiency certificates in the rental market. We show that incentives to provide energy efficiency information are higher in markets with higher penetration of certificates.

Work in Progress

Selected ongoing work by team members

Real Time Pricing for everyone” Fabra, N., D. Rapson and M. Reguant

We measure the elasticity of households’ electricity demand when faced with Real Time Prices.

Auctions with Unknow Capacity: Understanding Competition among renewables” Fabra, N., and G. Llobet. Slides.

We characterize bidding equilibria and market outcomes in renewables-dominated systems. A key feature of the model is that the availability of renewable capacity is random and it is private information.

Electricity tariff choice: do consumers dislike price volatility?” Fabra, N., Pareschi, F. and Reguant, M.

We estimate the determinants of electricity tariff choices by households, who face a trade-off between tariffs with volatile and low average prices versus tariffs with stable but more expensive prices.

The Distributional Impacts of Real-Time Pricing in the Spanish Residential Electricity Market” Cahana, M., N. Fabra and M. Reguant

We examine the distributional impacts that occur as a result of the adoption of Real Time Pricing for households.

On the Economics of Strategic Storage” D. A. Cerezo and N. Fabra

We asses firms’ incentives to operate and invest in electricity storage facilities under different market structures, including competitive and strategic storage owners in the cases in which the storage owner is integrated with a dominant electricity producer or it is a stand-alone firm. The results are key to understand how to regulate electricity storage, an issue which is critical for the deployment of renewables in electricity markets.

Published Papers

Selected publications of the team members

1.American Economic Association Papers Proceedings

Indoor Air Pollution and Infant Mortality: A New Approach” Imelda, American Economic Association Papers & Proceedings, 2018

We evaluate the effects of a program, implemented by the Indonesian government, which promoted the substitution of kerosene by gas as cooking fuel. We find that four fewer infants died per 10,000 live births than would have in the absence of the program.

2.Energy Economics

A Primer on Capacity Mechanisms” Fabra, N., Energy Economics, 75, 323-335, 2018

We model the need and effects of capacity mechanisms in electricity markets. We find that combining price caps and capacity payments allows to disentangle the two-fold objective of inducing the right investment incentives while mitigating market power.

3.American Economic Review

Pass-through of Emissions Costs in Electricity Markets”, Fabra, N., and M. Reguant, American Economic Review, 104(9), 2872-2899, 2014

We find that the pass-through rate of carbon prices to electricity prices in the Spanish electricity market is above 80%. The high frequency of auctions and the symmetry across all firms’ technology portfolios contribute to such a high pass-through rate.

4.European Economic Review

How to Allocate Forward Contracts: the case of electricity markets”, Fabra, N., and M.-A. de Frutos, European Economic Review, 56(3), 451-469, 2012

We model strategic bidding behavior in electricity markets. We show that allocating forward contracts across firms contributes to mitigating market as long as the contract allocation makes all firms virtually symmetric.

5.Economic Journal

Market Design and Investment Incentives”, Fabra, N., N-H von der Fehr and M-A de Frutos, Economic Journal, 121, 1340-1360, 2011

We assess firms’ investment incentives in electricity generation capacity when the energy market is organized as either a uniform-price auction or a discriminatory auction. We find that investment incentives are similar across the two auction formats, while prices tend to be lower under the discriminatory auction.

6.Energy Economics

Supply Security and Short-Run Capacity Markets for Electricity”, Fabra, N., and A. Creti, Energy Economics, 29 (2), 259-276, 2007

We model the interaction between capacity markets and energy markets when nearby countries rely on scarcity pricing to induce capacity investments.

7.RAND Journal of Economics

Designing Electricity Auctions”, Fabra, N., N-H von der Fehr, and D. Harbord, Rand Journal of Economics, 37 (1), 23-46, 2006

We model strategic bidding behavior in electricity markets organized as either uniform-price auctions or discriminatory auctions. We show the latter mitigate market power, resulting in lower albeit more volatile prices.

8.International Journal of Industrial Organization

Price Wars and Collusion in the Spanish Electricity Market”, Fabra, N., and J. Toro, International Journal of Industrial Organization, 23 (3-4), 155-181, 2005

We study the occurrence of price wars in the Spanish electricity market. We find evidence consistent with the use of such price wars as disciplining devices among colluding firms.

9.Energy Journal

The Spanish Electricity Industry: Plus ca Change” con Claude Crampes, Energy Journal, 26, 2005

We describe regulatory changes in the Spanish electricity market, which is embarked in an ongoing process of reform.

10.Journal of Industrial Economics

Tacit Collusion in Repeated Auctions: Uniform versus Discriminatory auctions”, Journal of Industrial Economics, 51 (3) 271-293, 2003

We show that tacit collusion is more easily sustainable under uniform-price auctions as compared to discriminatory auctions.