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We study the dynamic optimization of platform pricing in industries with positive direct network externalities. The utility of the network for the consumer is modeled as a function of three components. Platform price and participation rate affect the consumer’s decision to join the platform. The platform operator is assumed to know the consumer’s sensitivities with respect to these components. In addition, the consumer’s utility is a function of other attributes, such as network privacy policies and environmental effects of the service. We assume that the distribution of these unobserved preferences in the potential customer base is known to the platform operator. We show analytically how the unobserved preferences affect the dynamic platform price design. Both static and rational expectations with respect to the platform participation are presented. We simulate an electricity market demand side management service application and show that the platform operator sets low prices in the launch phase. The platform operator can set higher launching prices if it can affect customers’ preferences, expectations or adjustment friction.

Energy transitions are in many respects past the early exploration stages and moving towards the urgently needed mass market take-up. We examine the Finnish energy transition regarding how solutions – heat-pumps, deep retrofits and new district-wide solutions – that have demonstrated economic benefits and reasonable payback times have faced slow uptake and slow market development. We focus on the difficulties that suppliers and adopters face in establishing the value and singularization of goods when adopters need to act as calculative agents in the market. When the intermediation processes needed for market development do not cover the all the needed aspects, these market difficulties can persist until late in the transition process. We further elaborate how the intermediation takes place in ecologies of actors that become complex once the complexity of goods grows and the intermediation becomes tied to formalized arenas such as those found in urban development. Periodic assessment of the effectiveness of markets and ecologies of intermediation can inform policy interventions on market development. Highlights • Market formation in the energy transition may take longer than assumed • Intermediation is important in market formation prior to mainstream markets • Intermediation is not functional but happens in partial and shifting ways • Ecologies of intermediation and socio-material arenas pattern intermediation • The embedding of markets into complex patterns of intermediation slows market development

Given that, nowadays, 40% of the US corn crop is used for biofuel production, there is a growing concern that the rise in biofuel production might lead to an increase in food prices. However, it is also obvious that significant growth in biofuel use has minimized the demand for fossil fuel and has hence reduced the volume of carbon emissions. It is therefore crucial to model corn market volatility precisely because such an estimate could play a vital role in stabilizing food and biofuel market prices. For this purpose, we consider using the information content of the corn implied volatility (CIV) index to predict the corn futures market return volatility. Using symmetric and asymmetric GARCH‐class models, we find that the CIV index provides additional information beyond what is contained in the historical volatility of the corn market returns, and the information provided by the CIV index improves volatility forecasts for the US corn market. These findings could be extremely useful for energy market participants. peerReviewed

We investigate the relationship between energy commodities bases, inventory and financial stress from 1994 to 2018. We find that, from the 1998 Asian crisis the effect of financial stress on energy commodities bases gradually increased and from the 2008 crisis became positive, while the effect of inventory showed a gradual decline over time. The reactions of bases to changes in financial stress is nonlinear, as they are higher in the high financial stress periods. This is more profound in crude oil market than heating oil and natural gas. Moreover, the reactions of bases to the changes in inventory is nonlinear, as the reactions are lower when the inventory level is high confirming the theory of storage. We suggest that, in energy market, changes of inventory do not fully explain the variation of energy commodities bases, as the connection between commodity and financial markets increased during the recent years. peerReviewed

To enter a market and scale up, entrant firms often need to cooperate with their incumbent competitors, so they are in coopetition with them. Our goal is to increase the understanding of the antecedents of coopetition and the ways in which new entrant firms navigate coopetitive tensions with incumbents. Moreover, we are interested in the impacts that coopetition has on the value creation and value appropriation of new entrant firms. So far, most literature on cooperation and coopetition in energy markets has provided the perspective of the incumbents. To study the issues empirically, we interviewed 15 demand response (DR) entrants. These firms operate in Finnish energy markets, providing automated DR services, in which Finland is a forerunner country. According to our results, collaboration between new entrant DR firms and energy incumbents was needed in order to establish the new markets. In addition, cooperation with incumbents was beneficial to DR entrants since they were able to gain new customers and increase the efficiency of their resource use due to, for example, common technological development activities. We found that the structure of energy markets was an important factor in shaping the market entry of DR entrants. According to our results, new entrants can enter electricity markets without much cooperation with the incumbents, but cooperation is necessary in natural monopoly district heating markets. As new EU regulations will enhance automated DR services, the results of this study have relevance in other EU Member States where automated DR markets have not yet been established.

The transition toward more renewable-based energy systems increases the need for new flexible resources, such as demand response (DR). Previous literature has found various barriers for DR utilization, but much of this research has focused on the initiation of DR operations or barriers in national markets and not on factors that hinder market upscaling and firm internationalization. We address this gap by analyzing interviews with 22 DR companies active in Finland, one of the early mover countries for automated DR. While most of previous research has focused on electricity DR, our interviewees also include district heating DR companies. By using the Technological Innovation System (TIS) framework, we study how the advanced regulatory and market framework and the technology rollout in Finland have affected the DR service development and the internationalization of Finnish companies. Based on our results, the DR market formation in Finland has largely relied on the Finnish transmission system operator's early decision to allow independent aggregation and the early large-scale rollout of smart meters. The advanced home market has enabled firms to develop new solutions and prove their concept. Yet, the highly structured nature of energy markets complicates the access to both advanced and less advanced foreign markets. Highlights • We study how home market affects demand response (DR) business development. • We analyze impacts of advanced home market on internationalization of DR companies. • Advanced market has enabled firms to develop new solutions and prove their concept. • Services developed for an advanced home market do not guarantee export benefits.

River regimes in Nordic rivers are changing, mainly due to climate change and river regulation. As renewables penetrate the power market, the conventional role of hydropower in energy markets is also changing. These factors are altering river flows in ways that are not fully understood. This thesis addressed these information inadequacies in the ecologically sensitive Nordic region. To assess the relative effect of regulation practices and climate change, a spatio-temporal study of two adjacent rivers in Northern Europe, the Kemijoki (regulated) and Tornionjoki (pristine), with similar climate and catchment conditions, was performed. Degree of hydrologic alteration on Kemijoki was twice than at Tornionjoki, while regulation and climate change seemed to have similar degrees of effect on flow alteration in the Kemijoki (50% each). This was confirmed by analyzing data from Ounasjoki, a pristine tributary of the Kemijoki. Short-term changes in Nordic rivers were quantified using discharge datasets from 150 sites with hourly time-step. The results revealed high levels of hydropeaking in Nordic rivers, with increases especially in recent few years. This indicates that expanding for renewable energy, increasing the need for load balancing in the energy market, may increase hydropeaking in Nordic rivers. A method based on wavelet analysis was developed to characterize variability in hydrologic time series data in different periods. It was found that, in winter, sub-daily variations in some large Regulated Rivers were up to 20 times higher than in Free-Flowing Rivers. For smaller Regulated Rivers with lower levels of regulation, the variation was highest in summer. We have assessed the impact of intra-day power demand variation on Regulated Rivers flow and potential to comply with instant energy demand, by quantifying the impact of reservoir volume and hydropower capacity constraints using two new metrics, power market impact and system efficiency ratio. The metrics were tested for the Kemijoki, with defined thresholds based on the natural flow regime (Ounasjoki) and hourly energy price in Finland in 2017, to estimate the impact of regulation on hourly flow regime at Taivalkoski station. Annual flow regime impact in 2013, 2014, and 2015 was estimated to be 74%, 84% and 61%, respectively, while monthly impact varied from 27% to 100%. Tiivistelmä Pohjoismaisten jokien virtaamat ovat muutoksessa pääasiassa ilmastonmuutoksen ja jokien säännöstelyn takia. Säännöstelyn voimakkuuteen vaikuttaa vesivoiman alati muuttuva rooli energiamarkkinoilla etenkin uusiutuvien energiamuotojen lisääntyvä osuus jolloin tarvitaan enemmän säätövoimaa. Muuttuvien lyhyen ja pitkän aikavälin säännöstelykäytäntöjen vaikutuksista jokien virtaamaolosuhteisiin tarvitaan lisätietoa etenkin ekologialtaan herkistä pohjoisista joista. Säännöstelykäytäntöjen ja ilmastomuutoksen suhteellisen vaikutuksen arvioimiseksi tehtiin tila-ajallinen tutkimus kahdelle ilmasto- ja valuma-alueolosuhteiltaan samankaltaisella pohjoiseurooppalaiselle joelle, joista Kemijoki edustaa säännösteltyä ja Tornionjoki säännöstelemätöntä jokea. Säännöstellyllä joella havaittiin 100 % korkeampi hydrologinen muutos verrattaessa säännöstelemättömään. Joen säännöstellyllä ja ilmastomuutoksella näyttää olevan samanlainen vaikutus Kemijoen virtaaman muutoksiin (molemmat 50 %). Tulos vahvistettiin analysoimalla tietoja Kemijoen säännöstelemättömän Ounasjoen sivuhaaran aineistolla. Lyhytaikaisia muutoksia pohjoismaisissa joissa määritettiin kvantitatiivisesti käyttämällä 150 joen laajoja tuntikohtaisia virtaamatietoja. Tulosten mukaan lyhytaikaissäännöstely on näiden jokien tapauksessa korkealla tasolla, ja se on lisääntynyt viimeisen vuosikymmenen aikana. Syynä voi olla uusiutuvien energialähteiden lisääntyminen energiamarkkinoilla, sillä markkinoilla tarvitaan enemmän säätöenergiana toimivaa vesivoimaa tasapainottamaan sähköntuotannon vaihteluita. Työssä kehitettiin myös wavelet- aikasarja-analyysiin perustuva menetelmä hydrologisen aikasarjatiedon vaihtelevuuden karakterisoimiseksi eri ajanjaksoina. Tulosten mukaan joidenkin säännösteltyjen jokien päivittäiset virtaamavaihtelut olivat etenkin talvisin jopa 20 kertaa suuremmat kuin säännöstelemättömien jokien. Pienemmissä säännöstellyissä joissa muutokset olivat suurimpia kesäaikana. Päivittäisen energian kysynnän vaihtelun vaikutusta arvioitiin kahdella uudella indeksillä (energiamarkkinavaikutus ja järjestelmän tehokkuussuhde). Indekseja testattiin Kemijoelle määritetyillä kynnysarvoilla, jotka perustuivat säännöstelemättömään Ounasjokeen ja tuntikohtaiseen energian hintaan Suomessa (2017). Vuotuinen vaikutus virtaamaolosuhteisiin Taivalkosken padolla vuosina 2013, 2014 ja 2014 oli 74 %, 84 % ja 61 %, kun taas kuukausittainen vaikutus vaihteli 27 %:sta 100 %:iin.

Highlights • Combines dynamic optimization and numerical weather prediction (NWP). • Annual solar PV forecast error cost for the 1 MWp plant is 830€. • Solar PV generation imbalances reduced by 10% with demand side management. • Average and marginal benefits per household decrease with increasing network size. Intermittent renewable energy generation, which is determined by weather conditions, is increasing in power markets. The efficient integration of these energy sources calls for flexible participants in smart power grids. It has been acknowledged that a large, underutilized, flexible resource lies on the consumer side of electricity generation. Despite the recently increasing interest in demand flexibility, there is a gap in the literature concerning the incentives for consumers to offer their flexible energy to power markets. In this paper, we examine a virtual power plant concept, which simultaneously optimizes the response of controllable electric hot water heaters to solar power forecast error imbalances. Uncertainty is included in the optimization in terms of solar power day-ahead forecast errors and balancing power market conditions. We show that including solar power imbalance minimization in the target function changes the optimal hot water heating profile such that more electricity is used during the daytime. The virtual power plant operation decreases solar power imbalances by 5–10% and benefits the participating households by 4.0–7.5 € in extra savings annually. The results of this study indicate that with the number of participating households, while total profits increase, marginal revenues decrease.

Highlights • Investigate the impact of instant energy demand on sub-daily river regime. • Introducing power market impact index. • Introducing system efficiency ratio index. • Provides an efficient tool for sustainable river management. • Assess the interaction of power market and regulation practices. With increasing power production from renewable energy sources, sub-daily variations in energy demand need to be balanced. Today, hydropower is commonly used as balancing power. In this study, we quantified the impact of capacity constraints, in terms of reservoir volume and hydropower capacity, on the potential to comply with instant energy demand. To evaluate the impact, we developed two new metrics, power market impact and system efficiency ratio, which are based on two threshold flow regimes derived from natural flow as lower threshold release and regulated flow (based on hourly energy prices) as upper threshold release. The operation support model comprises 96 different regulation scenarios based on varying combinations of hydropower and reservoir capacities. For each scenario, an hourly water balance was simulated, to obtain the highest complying with upper threshold release based on actual energy demand. We tested the framework on the Kemijoki river with defined thresholds based on the natural flow regime (tributary river Ounasjoki) and the hourly energy price in Finland in 2017, and estimated the impact of regulation on hourly flow regime at the Taivalkoski hydropower station. The annual flow regime impact in 2013, 2014 and 2015 was estimated to be 74%, 84% and 61%, respectively, while the monthly impact varied from 27% to 100%. Our framework for evaluating interactions between the power market and sub-daily regulation practices is a useful novel tool for sustainable river management and can be easily applied to different rivers and regions and evaluated for different timescales.

Only abstract. Paper copies of master’s theses are listed in the Helka database (http://www.helsinki.fi/helka). Electronic copies of master’s theses are either available as open access or only on thesis terminals in the Helsinki University Library. Vain tiivistelmä. Sidottujen gradujen saatavuuden voit tarkistaa Helka-tietokannasta (http://www.helsinki.fi/helka). Digitaaliset gradut voivat olla luettavissa avoimesti verkossa tai rajoitetusti kirjaston opinnäytekioskeilla. Endast sammandrag. Inbundna avhandlingar kan sökas i Helka-databasen (http://www.helsinki.fi/helka). Elektroniska kopior av avhandlingar finns antingen öppet på nätet eller endast tillgängliga i bibliotekets avhandlingsterminaler. The British gas industry has experienced a massive structural reorganisation since the 1980’s with the privatisation of the national monopoly company British Gas in 1986 and the ensuing market liberalisation. These developments were largely driven by logic of economic efficiency, and traditional energy policy concerns, such as managing the balance of energy sources and ensuring security of adequate supplies, were not a major concern (Helm, 2005; Stern, 2004). The new approach thus represented a paradigmatic shift from the state monopoly model of the post-war period in which control over energy resources and self-sufficiency took priority. Helm (2005, p.3) argues that since the turn of the millennium another structural break has taken place amounting to a ‘paradigm shift’ as supply security considerations entered the energy policy discourse. The reason is mainly the realisation of the dawning depletion of the UK's domestic resources. The aim of this paper is two-fold: Firstly, to attempt to explain the move to the liberal market paradigm and how it resulted in a structural tendency for a continued opening towards the international markets. A historical institutional perspective will be adopted to account for the liberalisation developments in the 1980’s. Particular attention will be given to the role of ideas in the process. The objective is to demonstrate how the existing institutional arrangements in interplay with ideational currents facilitated the structural change that took place in the gas industry. Furthermore, they necessitated an opening up to the outside, namely towards the European Union (EU). Thereafter, the ideational paradigm shift has had a long-lasting effect on later developments. Secondly, the paper will aim to assess the implications of the new 'security paradigm’ and to what extent it can be considered a change from the 'liberalisation paradigm'. It will be argued that it cannot – at least as yet – be considered a paradigmatic shift in the same sense as liberalisation in the 1980s. The entering of security in the discourse amounts to little more than a defence of the liberalised market structure. The securitisation theory developed by Buzan (1991) and Waever (1995) will be introduced here to be applied on a study on the British government's position on security of supply issues since 2000, as expressed in various government reports on energy policy. It will be shown that market logic and non-interference is justified on security grounds. Lack of European and global liberalisation is presented as the real security problem, thus externalising responsibility.