Essays in Energy Economics: Incentives and Consumer Response

In this thesis, four papers are presented that deal with incentives and consumer response in the context of the transformation of the energy system. Chapter 2 deals with environmental policy instruments for investments in durable goods, assuming the existence of a zero emission backstop technology and that consumers are present biased. If the social costs of carbon and the CO2 price are sufficiently high, one can address present bias with a single instrument. While the level of this single instrument depends on the level of present bias, the chapter finds that there exists a tax-subsidy combination that is optimal regardless of the level of present bias. Chapter 3 and Chapter 4 provide empirical insights into real-world consumer response to price signals. In Chapter 3, the impact of regionally differing electricity prices on PV investments under net purchasing is investigated. The results show that network tariffs do impact PV adoption. The effect has increased in recent years when self-consumption has become financially more attractive, and the results confirm that PV investments are driven by the volumetric tariff. Chapter 4 analyzes the functional form and magnitude of short-term electricity demand response at the wholesale level. For low prices, the linear assumption tends to yield similar average elasticities to the constant elasticity obtained from the log-log specification. However, estimators based on linear functions exhibit significant variations depending on whether low or high prices are considered. In contrast, the log-log approach provides smaller differences between estimates based on low and high prices. Finally, Chapter 5 explores the implications of varying incentives in electric vehicle charging on regional residual load curves. The residual load curves change structurally as positive and negative peaks in residual demand increase over the years. Although the absolute flexibility potential of EV home charging increases with the number of vehicles