On 30 November 2014, German energy giant E.ON surprised most industry observers by announcing that it was spinning off its conventional power generation operations in Europe to focus on networks, renewable energy and consumer services.  The announcement marks the disappearance of a European energy superpower, whose history is tightly linked with that of the liberalisation of the electricity industry in Europe. This post draws a few observations from this announcement.

 

France receives about 14% of its electric power from hydroelectric plants whose outputs vary greatly depending on seasonal precipitation levels. Although there are major differences between countries, on average the percentage is the same in the European Union and the rest of the world. But the significance of this technology extends beyond its production levels. In fact, the flexibility of hydroelectric power plants makes this form of energy a crucial part of the answer to the versatility of intermittent demand and energy sources. Furthermore, after water circulates through turbines to generate electricity it can be put to other good uses downstream of retaining structures. So, in order to gain the most benefit from water resources, there must be an institutional framework whereby operators can take advantage of their equipment's flexible nature as well as meet the needs of other users of water. Currently, in France private operators are running large reservoirs through a concessionary scheme and the government is looking to replace these operators with semi-public companies. Can we expect to see more collective efficacy?   

Aficionados of the French electricity market - including the authors of this blog- have noticed an intriguing silence during the Christmas break: at the time of this writing, the government has not (yet?) published “l’arrêté prime”, which would set a bonus granted to residential demand response operators.  This silence is excellent news for electricity consumers, who will not have to pay for the strategic errors of these operators. This blog post explains this situation, and also presents the economics of demand response in electricity markets, an issue of interest for all electricity consumers, not only French ones.

Aficionados of the French electricity market - including the authors of this blog- have noticed an intriguing silence during the Christmas break: at the time of this writing, the government has not (yet?) published “l’arrêté prime”, which would set a bonus granted to residential demand response operators.  This silence is excellent news for electricity consumers, who will not have to pay for the strategic errors of these operators. This blog post explains this situation, and also presents the economics of demand response in electricity markets, an issue of interest for all electricity consumers, not only French ones.

Jean Tirole has recently received the “Nobel” prize in economics from the hands of the King of Sweden in recognition of his outstanding research, in particular on imperfect competition and the regulation of monopolies.  A large portion of Jean’s work examines the electric power industry.  This blog post summarizes its main contributions.

Pierre Dubois, professor of economics at TSE, is an expert in industrial organization applied to health and pharmaceutical economics. He gives us an insight here on recent and upcoming developments in this fast-moving field particularly subject to market shifts, government intervention, asymmetric information, uncertainty and barriers to entry.

Traditionally, the distribution charge paid by consumers of electricity connected to a grid is based on the capacity for which they subscribe and the number of kWh withdrawn during a given period.

The Global Crisis has intensified debates over the merits of financial innovation and the optimal size of the financial sector. This column presents a model in which the growth of finance is driven by the development of a financial innovation. The model can help explain the securitised mortgage debacle that triggered the latest crisis, the tech bubble in the late 1990s, and junk bonds in the 1980s. A striking implication of the model is that regulation should be toughest when finance seems most robust and when innovations are waxing strongly.

In April 2008, the Paraguayan Associación Nacional Republicana (ANR), locally known as the Colorado Party, was defeated in the presidential election by a coalition of opposition parties and social organizations led by a former Catholic bishop, Fernando Lugo.

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