The Impact of EU ETS Price Variations on Germany's Electricity Production Mix

Die Unternehmung - Swiss Journal of Business Research and Practice, Volume 3/2014, Pages 163-179.

Posted: 24 Sep 2014

See all articles by Francisca Bremberger

Francisca Bremberger

Vienna University of Economics and Business

Stephan M. Gasser

Vienna University of Economics and Business - Institute for Finance, Banking and Insurance

Thomas Reinhard Kremser

Vienna University of Economics and Business - Institute for Finance, Banking and Insurance

Margarethe Rammerstorfer

Vienna University of Economics and Business - Department of Corporate Finance

Date Written: March 23, 2013

Abstract

Motivated by the initiation of the third EU ETS trading period in January 2013, this paper examines the effects of EUA price variations on the electricity mix. We focus on the German electricity market, since it is one of the most important EU electricity markets. In this context, we formulate a simulation model for the scenario years 2011 2020, and 2030 as MCP and compute results utilizing GAMS. Our results indicate that the ability of EUAs to influence the production mix starts at EUA price levels that have not often been observable in the EU ETS until today (i.e. > €25-35/ton) and that in order to reach Germany’s future RES-E target shares, EUA price levels of €40 (2020) and €45 (2030) are sufficiently high enough according to our model.

Keywords: Electricity Market Modeling and Simulation, Cournot Competition, EU ETS Certificate Prices

JEL Classification: D60, L13, L52, L94, L98

Suggested Citation

Bremberger, Francisca and Gasser, Stephan M. and Kremser, Thomas Reinhard and Rammerstorfer, Margarethe, The Impact of EU ETS Price Variations on Germany's Electricity Production Mix (March 23, 2013). Die Unternehmung - Swiss Journal of Business Research and Practice, Volume 3/2014, Pages 163-179., Available at SSRN: https://ssrn.com/abstract=2500245

Francisca Bremberger

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

Stephan M. Gasser

Vienna University of Economics and Business - Institute for Finance, Banking and Insurance ( email )

Welthandelsplatz 1
Building D4
Vienna, 1020
Austria
+43 1 31336 6245 (Phone)

HOME PAGE: http://https://www.wu.ac.at/finance/people/faculty/gasser/

Thomas Reinhard Kremser (Contact Author)

Vienna University of Economics and Business - Institute for Finance, Banking and Insurance ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

Margarethe Rammerstorfer

Vienna University of Economics and Business - Department of Corporate Finance ( email )

Welthandelsplatz 1
1020 Vienna
Austria

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