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Session 18: Energy Policy and Regulation
Time: Friday, 27/May/2011: 11:30am - 1:00pm
Session Chair: Tahir Kapetanovic
Location: Paris


Evaluation of the Energy Policy for Lebanon

Raymond Fouad Ghajar1, Hassan Hamdan2

1Lebanese American University, Lebanon; 2Ministry of Energy and Water, Lebanon

The Lebanese Electric Power System (LEPS) suffers from technical and financial deficiencies that required the development of a policy paper to rescue it from its drastic situation to a new sustainable, reliable, and efficient delivery of electricity. An energy policy that includes ten strategic initiatives and 42 action steps that are integrated and correlated to cover the sector’s infrastructure, supply/demand, and the legal aspects was proposed and approved by the Government of Lebanon. This paper describes the current technical and financial situation of the LEPS and the need for an energy policy. The stochastic Load Modification Technique (LMT) is then used to assess the impact of implementing the projects proposed in the energy policy on energy production, overall cost, technical and commercial losses, reliability and customer service. The proposed technique is used to establish a technical and financial baseline of the LEPS against which the full implementation of the energy policy is compared and the resulting tariff is calculated.

Attracting Wind Generators to the Wholesale Market by Mitigating Individual Exposure to Intermittent Outputs: an Adaptation of the Brazilian Experience with Hydro Generation

Guilherme Luiz Susteras1, Dorel Soares Ramos2, Jose Roberto de Andrade Chaves3, Alexandra Cristina Vidal Januario Susteras4

1National Grid, United Kingdom; 2Universidade de Sao Paulo, Brazil; 3MRTS Consultoria e Engenharia, Brazil; 4IHS CERA, United Kingdom

Wind generators in the British electricity market have historically been spilling a significant part of their output in the system, without trading them in the open market. The effect is that the system operator has to operate in an environment where self-balance is no longer the norm, creating ever growing challenges for decisions in the real time operation of the market, especially moving forwards with the likely increased penetration of wind generation in Great Britain in response to governmental incentives to achieve its carbon emissions reduction targets. These low levels of trading activities are mostly due to the combination of uncertainties in wind generation output levels, which are intermittent in nature, and the relative small size of wind farm operators who lack large portfolios to hedge for such uncertainties. This paper illustrates the potential benefit of the introduction of an energy reallocation mechanism, similar to that existent in Brazil for hydro generators, in encouraging wind farm owners to increase their trading activities, reaching a more efficient market position and improving the liquidity of the wholesale electricity market. The investigation is done through the simulation of the maximum profitability of the combination of a number of wind farms with and without such scheme.

On Pricing Policy Transmission Mechanisms in Electricity Markets

Dubravko Sabolic

HEP Transmission System Operator, Ltd., Croatia

Electricity market transformation is a process that in many western countries has been going on long enough to show economic effects on the society. On the contrary, in many transition economies, like e.g. the South-East Europe (SEE), it is something rather new. I will first compare "canonic" goals of the reform, using e.g. [1], with what actually has happened in the SEE region (e.g. [2,3]), which is a good way to begin with a study of how public policies in electricity industry transform into economic effects. I will identify the type of pricing policy that seems to be deeply rooted in the SEE region's practical policies. Although many authors believe that there are large subsidies that keep electricity companies going on, I argue that this is not the truth. Rather, companies are frequently being politically influenced to keep their prices as low as possible for as long as possible, and in the long run they seem to be regulated almost perfectly, but only on the level of prices that can recover merely short-run costs. Finally, I will describe transmission mechanisms that connect pricing policies of the kind described above with virtually every market failure.

The Influence of Regulatory Objectives on the Intensity of Unbundling in Electricity Markets

Henrik Lindemann

University of Hannover, Germany

The degree of separation between transmission networks and the remaining stages of the electricity value chain varies considerably within the European Union. Suggesting a possible explanation for this diversity by assuming a regulator that acts as in Niskanen’s theory of bureaucracy, we show that in a multi-stage game the actual degree of unbundling is only determined by the weight attached to the objectives pursued by this authority. Hence, national regulators might exploit their discretionary powers to their own advantage. This might, in turn, decisively shape the deregulation process in European electricity markets and impede the development of a homogeneous regulatory environment across the EU.

The Covenant of Mayors Initiative: Barriers Towards Realising its Full Potential in Greece

Georgios C. Christoforidis, Stavros Lazarou, Marios Bakouris

Technological Educational Institute of West Macedonia, Greece

The Covenant of Mayors (COM) initiative invites cities to commit themselves to reduce voluntarily the greenhouse gas emissions within their territories. In this paper the COM initiative is presented and its mechanisms are analyzed. Emphasis is given to its current status in Europe through the introduction of suitable “participation factors”. Moreover, a study is presented concerning the COM initiative in Greece. The situation is presented and analyzed, showing that there exist barriers in realizing its full potential in Greece. The conclusions indicate lack of proper information and communication about the COM initiative and the obligations arising from its signing, difficulty in securing financial support for the development of the required BEIs and SEAPs and limited support from the communities themselves. The results may be used generally for other country’s signatories.

Electricity Distribution Regulation – Gap Analysis Between Croatian and Quality Dependant Model

Ivona Štritof1, Slavko Krajcar2

1Croatian Energy Regulatory Agency, Electricity Division, Croatia; 2University of Zagreb, Faculty of Electrical Engineering and Computing, Croatia

The aim of the paper is to identify a gap between the quality dependant regulatory principles and the up-to-date Croatian approach to regulation of distribution activity. The analysis of the main principles of optimal price-quality regulation and the overview of the Croatian regulatory practice and its results are given. Finally, the paper provides recommendations on a direction which Croatian regulation should take in order to aim at optimizing distribution activity from a socio-economic point of view.

Capacity Release, Asymmetric Regulation and Competition in Energy Markets

Cedric Clastres1, Laurent David2


Regulators or competition commission could adopt capacity release to increase competition in electricity and gas markets and to secure part of competitors’supplies. These policies, that we could de_ne as asymmetric regulations, have been decided in France, Italy, Great-Britain, Spain, etc. . . These regulatory policies force the incumbent to release part of its capacity of supply to competitors to enhance competition. So, regulators have to choose the amount of released capacities and the associated price. They could effectively improve competition because they give a capacity access to competitors. However, according to heavy investments in infrastructures, stranded costs emerge. Thus, policy makers have to suit their policies to maximize the welfare and to reduce losses.