Current policies focus on reducing CO2 emissions, neglecting the existence and impact of other air pollutants such as NO2, NH3, NMVOC, PPM10, PPM2.5, and SO2. We devise a strategy to model those emissions and related social cost accounting for diverging social and private discount rates in an...

Energy system and power market models refrain from distinguishing between private and social discount rates. We devise a strategy to account for diverging private and social discount rates in intertemporal optimization frameworks, resulting in an optimal carbon tax above the marginal damage when...

Decarbonization requires the transformation of power markets towards renewable energies and investment costs are decisive for the deployed technologies. Exogenous cost assumptions cannot fully reflect the underlying dynamics of technological change. We implement divergent learning-by-doing...

Energy efficiency and short-term demand response are key issues in the decarbonization of power markets. However, their interaction and combined impact on market prices as well as on the supply side, is yet to be understood. We develop a framework to implement investments in energy efficiency...

Electricity markets are prone to the abuse of market power. Several US markets employ algorithms to monitor and mitigate market power abuse in real time. The performance of automated mitigation procedures is contingent on precise estimates of firms' marginal production costs. Currently, marginal...

Market integration is seen as a complementary measure to decarbonize energy markets. In the context of power markets, this translates into regions that coordinate to maximize welfare in the power market with respect to a climate target. Yet, the maximization of overall welfare through...

The long-run development of power markets will be deeply affected by the gradual substitution of fossil fuel-based generation technologies by renewable energy technologies (RES). However, the intermittent supply of RES, in combination with the temporal non-homogeneity of electricity demand,...

Policymakers misjudge results of technology-rich optimization models because those models specify investment cost differently and thus are not equally sensitive towards changing financing cost and discount rates. We apply an intertemporally optimizing power market model to analyze three...

European energy crisis has three elements: skyrocketing prices for energy carriers such as natural gas, coal, as well as electricity, reduced nuclear power plant availability in France, and lower hydro power generation in Europe. This paper decomposes the effects of those elements on power...

We consider an economy in which competitive firms use three technologies for electricity production: pollutive fossils, intermittent renewables whose availability varies continuously over time, and storage. A Pigouvian tax implements the first-best solution. This is also the case for an...