Using sound theoretical, empirical, and simulation tools, researchers at EnergyEcoLab explore various issues with a common thread:
How to achieve a least cost energy transition.
Pollution and Well-Being
Assessing the efficiency and distributional consequences of dynamic electricity pricing.
Real-time electricity pricing (RTP) has been introduced as the default option for all households in Spain. This means that, instead of paying a traditionally flat retail price, residential consumers now face a retail tariff that varies hourly, according to changes in wholesale electricity prices. No other country has ever implemented RTP as broadly.
Access to a large dataset containing hourly consumption patterns of over 4 Million households allows us to test the effects of RTP. In particular, we explore whether household demand is elastic to hourly price changes, whether RTP has distributional effects across different types of households, and whether consumers are likely to abandon RTP in the search for less volatile albeit more expensive tariffs.
Studying the market impact of renewable energies. Designing policies to induce efficient investments in renewables.
In several countries, renewables already represent more than one third of total electricity generation, and they are expected to become the main source for power generation by 2030. Yet, we do not have a full understanding of how renewable producers will compete among them in renewables-dominated markets. Most of the existing models do not capture one of their distinguishing features – namely, their availability is uncertain, and this introduces asymmetric information among firms. In the project, we build a new model of competition among renewables: (i) to understand their market price impacts under the current arrangements, and (ii) to identify the effects of changes in market design in renewables-dominated markets.
The above is linked to the question of how to induce the optimal investments in renewable technologies. For one reason: if investment rights are allocated through auctions, as it is common practice in many countries nowadays, the investors’ willingness to compete will depend on the expected flow of revenues they expect to obtain once in place. Hence, designing renewables auctions involves the two-fold task of (i) designing the bidding process it self; as well as (ii) designing the contract to be auctioned off.
Electricity Market Modelling
Simulating electricity market outcomes to identify the effects of policy and structural changes.
How would the electricity market react to an increase in renewables, to an increase in carbon prices, to the mothballing of polluting plants? How would it react to a merger between competitors, to entry by smaller players, to an increase in the interconnection capacity between countries? Does it matter for market performance whether renewables are subject to Contracts for Differences or to fixed premia contracts?
Running simulations is a powerful tool to uncover the effects of such structural and regulatory changes. Researchers ate EnergyEcoLab have developed a windows-based software, energeia simula, based on an oligopoly model that reflects most important features of electricity markets. energeia simula is capable of predicting (static) equilibrium bidding behavior among generators under various scenarios and thus construct counterfactual scenarios to assess the impact of policy and structural changes. At EnergyEcoLab, we regularly update the model to include new functionalities.
Pollution, Health, and Well-Being
Measuring the causal impact of pollution on health. Understanding how cleaner energy can improve health and impact human behavior.
Social and health impacts of pollution should be measured and factored into policymaking. Focusing on evidence-based policymaking, we are exploring new evidence and approaches to estimate the health impact of energy and environmental policies. For instance, we are looking at the health impact of indoor air pollution using a large policy experiment occurred in Indonesia.
There are many policy tools that are widely believed to offer promise to decrease the greenhouse gas emissions. For example, energy efficiency technologies or traffic restrictions. However, individual optimizing behavior can obscure potential impacts, and may lead to unintended consequences. Therefore, these questions are often an empirical question. Here, we are exploring novel evidence on these relationships.