The goal to promote Renewable Energy Sources from Electricity (RES-E) in the European context coexists with goals of ensuring a single internal market for electricity, and security of supply in the European Union. These simultaneous goals are not always congruent with each other. Today, significant amounts of intermittent RES-E in the energy mix have led to unintended effects in the electricity market. This is a problem, since targets and support schemes are designed at the national level, whereas the electricity market is increasingly interconnected across national borders.
The central question addressed in this work is: How do national renewable electricity support schemes interact with the electricity market over the long term (20-30 years) as the European Union transitions to a decarbonised energy system?
Based on theoretical foundations of institutional analysis, design theory, and agent-based modelling, RES-E support schemes are broken down into their 'design-elements' from a welfare economics perspective, and implemented in a model of an energy market. The energy market model is called Energy Market Laboratory, or EMLab Generation. EMLab Generation mainly comprises an electricity market clearing module and an endogenous investment module, enabling the researcher to study long term dynamics of policy designs in the electricity sector.
Key results include the following. The model shows that the way electricity price uncertainty is taken into account while designing subsidies makes a substantial difference to welfare distributions; a conclusion that is often hidden due to assumptions of perfect information. When multiple countries are considered, the spreading of the merit order effect from a larger country to a smaller one would cause the smaller country's subsidy costs to increase. This indicates that even if RES-E support can be designed to be "market-based" at the operational level, designing RES-E support to be "market based" at the investment level is far more complicated. It indicates that RES-E targets of countries should take into account the targets of neighbouring countries, as well as the amount of flexibility in the electricity system. In terms of its scientific contribution, the work takes a step towards integrating institutional analysis and design theory in order to complement the neo-classical school of thought which arguably dominates energy policy design and analysis in Europe.Brief Bio of Speaker:
Dr. Kaveri Iychettira is a postdoctoral fellow at the Harvard Kennedy School's Belfer Center. During her fellowship, she is working on the Science, Technology, and Public Policy Program's (STPP) Emerging Issues Project. Her project is focused on identifying strategies to enable India's electricity markets and trading mechanisms to handle greater shares of intermittent renewable energy. She is also helping to build a research collaboration between the Indian Institute of Technology Delhi and Harvard University to set up a program focused on India's energy transition.
She received her doctoral degree from the Delft University of Technology in the Netherlands in 2018, and her dissertation was titled, "National Renewable Policies in an International Electricity Market: A Socio-Technical Study." During her Ph.D. research, she investigated the design of renewable support schemes in Europe and its long-term impacts on the energy system. Apart from this, she has also worked on capacity market studies in Europe and on the deployment of solar energy in India.