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This paper develops a framework for renewable producers to withhold capacity from the dayahead market in response to higher renewable output risk. The developed hypotheses are tested on a rich dataset from the German electricity market, with a novel measure of renewable forecast risk. The data does not support the presence of renewable withholding in Germany, based on the observed risk premium and day-ahead supply bids. This suggests that firms do not have access to this information or do not regard this as relevant. [ABSTRACT FROM AUTHOR]

Building an energy system compatible with the Paris Agreement requires large-scale investment in renewable energy technologies (RET). Designing effective energy policies, therefore, requires an understanding of the dynamics of RET investment risk. This study draws on RET project data and 40 interviews with investors in Germany, Italy and the United Kingdom. We show that risk premiums and investment risk have declined for solar photovoltaics and onshore wind technologies in all three countries. Increasing technology reliability at a lower cost, data availability, better assessment tools and credible and stable policies were crucial elements of this declining investment risk. We identify the five most relevant risk types (curtailment, policy, price, resource and technology), show their relative importance over time and use network analysis of interview transcripts to identify the drivers behind the observed changes. While technology and policy risks have declined substantially over time, curtailment and price risks are becoming relatively more important. From these insights, we derive recommendations for policymakers aiming to accelerate the transition towards a Paris-compatible energy system. [ABSTRACT FROM AUTHOR]

We analyze how tariff design incentivizes households to invest in residential photovoltaic and battery storage systems, and explore selected electricity sector effects. To this end, we develop an open-source electricity sector model that explicitly features prosumage agents and apply it to German 2030 scenarios. Results show that lower feed-in tariffs substantially reduce investments in residential photovoltaics, yet optimal battery sizing and selfgeneration are relatively robust. With increasing fixed parts of retail tariffs and, accordingly, lower volumetric retail rates for grid consumption, households have lower incentives for self-consumption. As a consequence, optimal battery capacities and self-generation are smaller, and households contribute more to non-energy power sector costs. A cap on hourly feed-in by households may relieve distribution grid stress without compromising PV expansion or prosumage models for households. When choosing tariff designs, policy makers should not aim to (dis-)incentivize prosumage as such, but balance effects on renewable capacity expansion and system cost contribution. [ABSTRACT FROM AUTHOR]

Carbon emissions can be curbed down through a public intervention -- for instance, a public decision that increases directly the fraction of renewables in the energy mix, or a carbon tax. For a given target of reduction of carbon emissions, each policy instrument triggers different effects on prices, GDP and intergenerational inequality. In this context, the social choice as concerns the mix of instruments is not necessarily trivial. This article relies on a dynamic general equilibrium model with overlapping generations in order to determine the mix of instruments for different types of social preferences. This model is parameterised on German data. Results suggest that a social planner that takes account of the welfare of future generations and is highly averse to intergenerational inequality chooses to implement a relatively moderate, fully recycled carbon tax and to increase in parallel the fraction of renewables in the energy mix -- even if the recycled tax favors growth and future generations. Only authorities with utilitarist preferences implement a low-carbon transition relying mostly on a fully recycled carbon tax. Overall, our article suggests that intergenerational redistributive effects can significantly influence the social choice as concerns environmental policies and the mix of instruments. [ABSTRACT FROM AUTHOR]