Publications

In this article renewable energy support allocation through different types of auctions are assessed: uniform pricing is compared to pay-as-bid auctions. The applied methodological framework is auction theory and an extended LCOE calculation, based on the rules governing the German photovoltaic (PV) Feed-in Premium (FIP) auctions. 
Available at the publisher’s website

Predictable access to sufficient water is one of the cornerstones of social well-being, but unlimited resources are available to a lower and lower extent in much of the world. Hungary’s position is good for the time being, but there are signs of deteriorationas well as evident future risks. It is essential that scarce water resources are used as efficiently as possible, while reflecting the preferences set by society. The Hungarian legal and institutional system is currently ill-suited to this. Price-based economic instruments can help decisionmakers in their effort to efficiently allocate limited volumes of water. The authors detail the dilemmas and conflicts of interest associated with the allocation of scarce resources and also describe the interrelations along which economic instruments help to allocate scarce volumes toward uses with the highest possible potential for value creation. Their findings are supported by foreign examples.

Available at the website of Hungarian Journal of Hydrology

Life Cycle Assessment (LCA) is an increasingly widespread method for the environmental accounting of products and services. Since almost all production processes use grid electricity, the environmental impact of power generation plays a key role in LCA. In this paper, a method is presented for linking a detailed economic model and life cycle assessment to evaluate both intra-annual and long-term variation in the environmental impact of grid electricity. The model is applied for the case study of Hungary for three future scenarios. Our results show that in the next 30 years, 87% reduction is expected in the Global Warming Potential compared to 2018 in the Hungarian electricity mix if the decarbonisation of the grid is fulfilled. The effect of intra-annual variation is relatively low in the current fossil-based electricity market, but its significance is expected to increase in the future with a change in the coefficient of variation to 77% from 10% by 2050. The results indicate that dynamic modelling of electricity taking into account variation due to cross-border trading and renewable penetration will influence the LCA results for products depending on their lifetime and pattern of electricity use.
The analysis is available: Science Direct

The paper examines the interactions between nuclear and variable renewable generation capacities (vRES) under various assumptions in the broader V4 region. Four exploratory scenarios are analysed with high and low penetration levels of vRES and nuclear applying electricity dispatch and unit commitment models. The assessment quantifies the impacts of the joint evolution of these technologies, measuring the effect on utilisation rates, wholesale prices, market values of vRES, energy not supplied (ENS) and the changing production and trading patterns in the projected 2035 electricity system. The results are indicative of a ‘double competition’ between (i) nuclear and vRES technologies within the merit order and (ii) between the NPPs in the region. If the ambitious V4 nuclear plans are indeed execute, NPPs will compete for limited export opportunities during times of high vRES production periods. Thus, coordination of long term energy policies within the V4 region is critical to manage nuclear and vRES developments and trade patterns with the aim of improving flexibility and security of supply to mitigate the negative economic impact on the electricity system. 
Highlights 

Available at the publisher’s website

Decommissioning of nuclear power plants are very costly. In most of the countries using nuclear capacities for electricity production, the dismantling of nuclear waste is financed by a nuclear fund. Due to the fact that the decommissioning and the safety nuclear waste disposal costs are incurred after the closure of nuclear plants, the discount rate is a crucial factor. First, we show various theoretical methods of determining the discount rate and also the applied methods using in the European countries are demonstrated. In our analyses we use different approaches on discount rate and calculate the effect of this factor to the yearly payment of Paks Nuclear Power Plant into the Central Nuclear Financial Fund. 
Available at the publishers website (in Hungarian)

The Russian gas transit through Ukraine and the possibility of circumnavigating the historically dominant route poses a serious challenge to European gas markets. With the application of market modelling tools, this paper examines Russian export strategies to Europe using different transit route combinations. Although the cessation of Ukrainian transit would not endanger the security of gas supply in Europe, it would result in higher prices in all scenarios. In scenarios that include Nord Stream 2 and TurkStream 2, Ukrainian transit is non-essential for Russia to maintain its current share of EU gas imports. At the same time, the results show that limiting Ukrainian transit is less profitable for Russia: even if all the planned infrastructure is completed, shutting this route would result in losses of close to 5 billion € per year in Russian gas sales. Since it appears inevitable that Nord Stream 2 and TurkStream 2 will be built, a no transit scenario is a real possibility thereafter. In this case the V4 should lobby for Balkan Stream, with investment costs borne by Gazprom. However, if there are continued deliveries via Ukraine there is no need for Balkan Stream. 

Available at the publisher’s website

In Hungary, renewable energy consumption is predominantly biomass in the form of firewood for household heating. This stock has allowed the country to remain on track with its renewable target for the last fifteen years despite avoiding the promotion of what were relatively high-cost renewable electricity generation technologies. However, in the near future, the support policy must be reconsidered for the active expansion of the renewable sector. This study presents the evolution of the Hungarian renewable support system across electricity, heat and transport sectors over the last 15 years, and highlights regulatory cases which, in their current form, hinder the environmentally and economically efficient development of renewable energy production and consumption. 

Available at Corvinus Repository

The process of structural reforms, market design changes and regulatory measures of the Hungarian electricity sector can be described as the machinations and the character of a tango in the last 30 years; fast dynamic moves back and forward, with side steps and stops, full of tension. In the era of structural changes (1992-2001) the foundation of the current market regulation were laid. This was the time of privatisation and the creation of long term power purchase agreements. The period since 2001 can be described as the era of unfolding competition characterised by a hybrid system resulting from partial market opening, followed by intense market liberalization. The great recession marks a significant turning point, as in the 2010s participation of state in the energy markets were reasserted. Beside the restoration of price regulation capabilities, market regulation was centralized, and, through state acquisitions in energy companies, the role of the state was strengthened as a market player. 
Available at the Corvinus Repository

Since the opening of the natural gas market in 2004, profound changes have taken place in ownership, regulation and operation of the natural gas market. After morphing to a multi-player competition market structure, some market segments returned to strong centralisation and state control. This article enriches the literature on the developments of the Hungarian natural gas market from 2004 as no other analysis has done so far. To describe the history of the sector, the authors compare the indicator of Hungarian natural gas market regulation based on consumer experience (MPI) with the expert evaluation market structure index (ETCR) and the development of wholesale and retail prices. 

Available at Corvinus Repository

From the 2000’s until today, much has changed on the Hungarian electricity wholesale market. In this article the authors present an overview of market liberalisation efforts of the past 15 years across different market segments (supply side, trade); how and when barriers were eliminated and conditions of real wholesale market competition emerged in the Hungarian power market. The efficiency of market opening is evaluated according to different areas including development of investments and prices, role of imports and, in connection with the latter, security of supply. Unbundling and privatisation was key for creating the proper market structure as the basis of liberalization. The new power market laws (in 2001 and 2008) and the abolishment of LTCs in 2008 were important factors to facilitate competition. Access to import capacities also played a key role. A major element in market opening was the establishment of the Hungarien Power Exchange (HUPX), bringing transparent price signals for Hungarian and Balkan market participants. Though Hungary has come a long way towards regional market integration (mainly through market couplings), a significant spread still remains between Hungarian and (the reference) German power prices. 

Available at Corvinus Repository

This paper investigates the trend and the influencing factors of greenhouse gas (carbon) emissions in Hungary with a special focus on the sectors under the European Emissions Trading Scheme (ETS). The authors find that changes in carbon intensity of primary energy use and efficiency of primary energy transformation have not been deep enough to ensure a substantial and lasting decoupling of carbon emissions from economic growth in Hungary. The only component they prove to have decreased the carbon emissions is the structural changes of the economy. The factor of structural changes has been reducing Hungarian emissions in the 90’s but it has failed to offset the effects of the recent economic growth, which triggers net emissions to increase both in the ETS sectors and the rest of the economy. They find no evidence for emigration of regulated industries under ETS so far. Structural changes observed in the national economy seem to be independent of ETS, as economic activity has been growing in less carbon intensive sectors. 
Available at Corvinus Repository

In this article, the authors look at the recent history of the Hungarian water utility sector, dividing it into two essential periods: the pre-2011 and post-2011 periods are separated by the adoption of a globally unique sectoral reform package. At the same time, since 2012 the otherwise positive reform processes have been shadowed by newly introduced financial burdens falling on the sector. They analyze whether under the current regulatory regime it is reasonable to characterise the water utility sector as sustainable and equitable, in as far as the service tariffs are proportionate to the financial capacity of different customer groups.

Available at Corvinus Repository

This report takes a deeper look at the future of regional market integration for power systems with high shares of wind and solar in Southeast Europe (SEE). Because these technologies vary in output depending on the weather, they bring an increased need for flexibility services in the power system. Further integration of European power markets is a crucial enabler of flexibility. 
Available at the publisher’s website.

The future of gas transit through Ukraine is one of the most pressing energy security issues facing the EU in 2019, with the current gas shipping contract between Russia and Ukraine set to expire 31 December and the realization of alternative pipeline routes facing delays or uncertainty. Using market modelling tools, this paper examines Russian export strategies to Europe using different transit route combinations. Although the cessation of Ukrainian transit would not endanger the security of gas supply in Europe, it would result in higher prices across Europe in all scenarios. The loss of welfare in the V4 is, at best, only partially compensated with the addition of the alternative infrastructure, even if they are financed by Russian capacity bookings. In those scenarios where Nord Stream 2 and Turk Stream 2 are completed, Ukrainian transit is not essential to maintain the current Russian share of EU gas imports. However, the results also show that halting Ukraine transit is less profitable for Russia, even if all the planned infrastructure is completed. In this scenario, utilizing Ukrainian transit has the potential to increase its share of EU imports up to 50 percent. Alternatively, circumventing Ukraine would result in significant profit loss for Russia, close to 5 billion € per year.

Available at the publisher’s website (in Hungarian)

From time to time there is a need for the development of a predictable regulatory framework that takes into account the considerations of both investors and users of services in the context of price regulation of asset-intensive utility services. In our analysis, we review a small part of this highly complex topic, the theoretical and practical issues of the accepted value of the regulated assets by the regulator, which is one of the most important elements in determining the investor’s allowed return. We present the most important theoretical models, the development of regulatory theory and practice in Hungary, and then we illustrate the impact of the regulatory environment on companies’ investment decisions by analysing time series data of the Hungarian gas distribution sector.

Available at the publisher’s website (in Hungarian)

The relationship between energy costs and the competitiveness of manufacturing companies has been attracting the interest of researchers and decision-makers for decades. In the early 2010s the issue received renewed attention, mainly due to the increased continental gas price differences resulting from the American shale gas revolution and the Fukushima accident. In Hungary, the utility cost reduction measures launched in 2013 raised concern, as some electricity tariff components formerly paid by households have been shifted to consumers in the competitive market segment. The study analyses the evolution of the “real unit energy cost” (RUEC), measuring energy costs per unit of value added in the manufacturing industry of Hungary and 4 other European countries: Germany, Spain, Portugal and the Netherlands, over the period of 2009 – 2015, based on Eurostat data. The LMDI decomposition of the real unit energy cost index reveals how the energy cost competitiveness of manufacturing industries in Hungary, Germany and Spain was influenced by the changes in energy price, the energy intensity of production, and the structure of the manufacturing sector. 
The study is available at the website of the Economic Review

Flood recovery is an important period in the flood risk management cycle. Recently, flood recovery has become viewed as an opportunity for future flood damage mitigation. Financial flows to cover flood damages and rules regarding their allocation are crucial for supporting or undermining mitigation efforts. In this paper, we map and compare state flood recovery funding in the so-called Visegrad Group Countries (V4), i.e. Czechia, Hungary, Poland and Slovakia, over the past 30 years of their democratic history. We apply a qualitative comparative approach to identify differences and similarities in risk sharing and state flood recovery funding approaches among these countries. Additionally, we reveal how risk sharing is addressed by existing flood recovery funding schemes. The results indicate that national governments have a low willingness to institutionalise ex-ante compensation schemes. Ad hoc instruments initiated shortly after disastrous flooding usually do not provide incentives to reduce future flood damages. 

Available at the publisher’s website

This paper assessesthe cost efficiency of renewable electricity (RES-E) support schemes in Europe for the 2000–2015 period based on data collected by CEER from national regulators. A cost efficiency indicator (CEI) and Data Envelopment Analysis (DEA) were applied to measure the economic efficiencies of RES-E support schemes in Europe for the two most deployed renewable technology: photovoltaics and wind. The proposed CEI provides a relative and comparable measure of economic efficiency of support, measuring the cleaned (net of whole sale price) unit support value of RES-E production over consumption. The DEA assessment includes more input variables measuring economic performance of EU member states in RES-E support, where the levelised cost of electricity (LCOE) served as input alongside the CEI. After a detailed literature review introduces previous studies on both types of efficiency measures for renewable deployment the results are presented and explained. This study reveals that although the performance of PV support improved rapidly in the time period, wind generated electricity remained more cost efficient. The DEA found wind support schemes in North European countries (Norway, Sweden, Ireland and Denmark) and PV support schemes in Romania, Malta, Cyprus and Italy to be notably cost efficient. Some of these countries are the traditional large-scale producers (like Denmark or Italy) but ‘newcomers’ also performed well due to technology learning resulting in low entry costs. The DEA shows that financing conditions are perhaps as important as resource endowment in determining cost efficiency of support schemes across EU countries. Based on the outcomes we conclude with recommendations to improve the design for more market oriented RES-E support schemes as required by new EU legislation. 

Available at the publisher’s website.

One of the most important challenges for the South East Europe region will be replacing more than 30% of its presently installed fossil fuel generation capacity by the end of 2030, and more than 95% by 2050 if its age structure is considered. This requires a strong policy framework to incentivise new investments in a region currently lacking investors, but also presents an opportunity to shape the electricity sector over the long term according to the broader energy transition strategy of the EU and the Energy Community. The aim of this paper is to assess what type of long-term pathways exist for electricity sector development in the region if they follow the energy transition process of the EU. In this model-based scenario assessment, long term electricity sector futures are explored using a set of interlinked electricity models evaluating the level of renewable energy investment required in the region to reach a deep decarbonization target, assuming emission reduction above 94% by 2050 compared to 1990 in line with the long term market integration and climate policy goals of the EU. It also explores what are the most important system wide impacts of the high deployment of renewable energy concerning generation adequacy and security of supply.
Key policy insights 

Available at the publishers website

In early March 2017, long-term capacity bookings were held on the PRISMA auction platform, which covers most of the European Union’s natural gas transmission grid. In this short analysis we highlight amarket distortive phenomenon that may be the result of an information advantage of the dominant gas supplier in Europe. By paying about EUR 9 Bn capacity bookingfees for the post-2020 period, Gazprom hasagain secured its control over the Central-Eastern European region and gas trade to the Ukraine. 

Available at the publisher’s website (in Hungarian)

While the economic policy concept of the second river basin management plan (RBMP2) for 2015-2021 complies with the requirements of the WFD and the so called ex ante conditions, it also portrays the economic policy instruments that have been designed to tackle domestic water management problems as an interrelated, coherent, mutually reinforcing system. The goal of the current article is to highlight this overarching perspective. In addition to implementing the short term ex ante conditions by 2016, the concept also makes a number of recommendations for implementation until 2018 within the RBMP2, or beyond. The recommendations are in line with the targets of the Kvassay Jenő Plan / National Water Strategy. Based on the problem assessment the most important and urgent measure is the reinforcement of the government functions that can ensure the sustainable use of water resources. This could provide a stable basis for the regulation of the use of scarce water resources and finite water management infrastructure capacities. The economic conditions created by the appropriate management of infrastructure and resources could then provide the foundation for introducing incentives to influence decisions on land use, a major driver of the quality of our water bodies (e.g. with respect to reducing nutrient loads). Shifting water management and water services toward more efficient utilisation is not hindered by the absence of technical and engineering knowledge–there is plenty of that. The main obstacle is unclarity of economic interests, which makes it difficult to launch technical-ecological solutions that also support financially sustainable water management activities (e.g. management of excess water inundations, irrigation). The cautious application of economic policy instruments is inevitable to clarify economic interests and develop efficient, sustainable solutions within the water sector. 

Available at the publisher’s website 

The Water Global Practice, under the WSS GSG Utility Turnaround thematic area, has implemented the Global Study on WSS Utility Aggregation to provide evidence-based guidance to policy makers and practitioners regarding when, why, and how water and sanitation utilities can work together (“aggregate”) to successfully deliver specific policy outcomes, such as better services or lower costs. This work builds on a review of existing literature and an analysis of both qualitative and quantitative evidence, a global data set of international trends, a utility performance database, and a series of case studies. The deep-dive of 14 case studies of aggregation processes in seven countries (Brazil, Colombia, Hungary, Indonesia, Portugal, Mozambique, Romania) allowed conducting a qualitative analysis, by centering on the stakeholders involved, the decisions made, the roles of sector actors and their incentives, and the perceived outcomes with a view to bringing forward the essence of each case experience. The selection of the countries and specific providers was done in a manner to ensure a diversity of geography, development level, size, and aggregation design.  

Available at World Bank website

The Water Global Practice, under the WSS GSG Utility Turnaround thematic area, has implemented the Global Study on WSS Utility Aggregation to provide evidence-based guidance to policy makers and practitioners regarding when, why, and how water and sanitation utilities can work together (“aggregate”) to successfully deliver specific policy outcomes, such as better services or lower costs. This work builds on a review of existing literature and an analysis of both qualitative and quantitative evidence, a global data set of international trends, a utility performance database, and a series of case studies. The deep-dive of 14 case studies of aggregation processes in seven countries (Brazil, Colombia, Hungary, Indonesia, Portugal, Mozambique, Romania) allowed conducting a qualitative analysis, by centering on the stakeholders involved, the decisions made, the roles of sector actors and their incentives, and the perceived outcomes with a view to bringing forward the essence of each case experience. The selection of the countries and specific providers was done in a manner to ensure a diversity of geography, development level, size, and aggregation design. 
Available at World Bank website

The aim of this paper is to analyse the price convergence between the German (EEX) and the Hungarian (HUPX) power exchanges, in the case of daily average DAM prices. Many articles have sought to explain the persistent spread between the two markets but there is no accepted consensus among the oft appearing hypotheses.
The paper focuses on the 2011-2013 period, and three hypotheses are established to explain the spread: i) insufficient net transfer capacity (NTC) on the northern borders (especially with Slovakia) for equalization between the markets; ii) unfavourable hydrological conditions in the Balkan area that lead to increased demand for Hungarian imports and push up prices in Hungary; iii) non-planned domestic power plant outages increase the Hungarian price. The methodology applies crosstabs and linear regression. With the cross-tabs, the effect of both the Slovakian and Austrian NTC, the Balkan precipitation and the non-planned outages on the spread are tested. All these have been proved to have a significant effect on the price difference. Linear regression reaches almost the same conclusions, however effect of non-planned power plant outages is not significant. Both cases the higher vulnerability of weekends is demonstrated. Finally the effect of the above used variables is tested with the 2015 version of REKK’s European Electricity Market Model (EEMM). The model confirms the above findings, except that the higher spread appears in peakload periods.
Available at the publisher’s website. 

The European Commission’s proposed regulatory package of November 2016 revitalised the Hungarian goverment’s rhetorics of “defending the utility bill cuts,” and the debate about the financing of these cuts.This article reviews how the Hungarian gas price regulation of Universal Service follows market developments, and which market participant benefitted the from recent oil- and gas price drops. 

Available at the publisher’s website 

Reservoirs for the transient storage of water in order to lower river flood peaks would usually be built on farmland and used in case of a serious flood event. Farmers’ willingness to have their lands included in a reservoir critically depends on the compensation they will obtain. Our paper proposes a new compensation scheme that consists of an unconditional annual payment and a reparation payment conditional on flooding. We determine the properties of an optimal contract offered by the river authorities to farmers that specifies the compensation scheme and the rules for the use of the reservoir. The two-tier payment scheme induces crop choices of farmers that lower the damage profile of land use and it covers the long-term costs of land use change to ensure voluntary participation. We illustrate the working of the payment scheme using data from a case study from the river Tisza in Hungary.

Available at the publisher’s website  

Local urban planning has become concerned over clean energy technologies development on greenfield land that may lead to competition in land use. Solar photovoltaic systems on agriculture land is an indicative example of this disputed strategy. At the same time closed landfills and their post-closure management pose environmental, economic and land value concerns at the local authorities. In the present work we analyse the concept of solar photovoltaic system installation in closed landfills. This practice has already received attention and the present article provides an overview of existing installations as well as assessment of the existing potential. Moreover, it introduces a methodology that geoanalyses closed sites, evaluates them in a hierarchical manner and suggests the appropriate PV technology for each site. The methodology has been applied in Hungary and revealed that 450MWp of solar could be deployed in Hungarian closed landfills. EU-level projections provide estimations for the potential to range around 13GWp. Such an approach may become a forefront instrument in the local, bottom-up sustainability policy planning.

Available at the publisher’s website 

The paper analyses the effects of Nord Stream 2 on the wholesale natural gas prices of European countries and the European gas market competition. We also assess the effect of this new infrastructure on the planned PCI projects of Central and Eastern Europe. The results show that expanding Nord Stream causes a crowding-out effect on the capacities allowing access to Western European gas markets, due to the change in delivery point of the long term contracts. This inhibits market integration of Western and Eastern Europe, resulting in a higher price difference between this two regions. Total welfare effects of the expansion are negative, majority of welfare losses are borne by Central-Eastern European consumers and TSOs. The study points out that re-routing of the long-term contracts may induce congestion on the West-to-East interconnectors, causing an additional one billion euro investment need to alleviate these bottlenecks.

Available at the publisher’s website

Increasing renewable-based district heating could contribute significantly to the renewable target achievements of Central and Eastern European Member States with significant shares of district heating in their heat markets. These countries face dual challenges: high competition with other heating sources (including individual heating) and decreasing heat consumption due to building-related energy efficiency improvements in the sector. Our paper is based on a Hungarian case study, attempting to contribute to identifying the most efficient options to achieve these targets in the district heating sector. We apply a district heating model covering all district heating systems in the country and assess the available policy instruments with the potential for increasing renewable energy sources deployment and competitiveness in the sector. The assessment shows that investment grants and operational support are efficient instruments to increase renewable energy sources shares and also improve efficiency in the sector, while end user price and renewable co-generation support in the electricity market lead to non-optimal outcomes.


Available at the publisher’s website

This paper presents the results of a coordinated modelling assessment that incorporates European energy efficiency and renewable policies with two potential gas market scenarios. First, the impact of EU energy efficiency and renewable policies on natural gas demand is calculated using the PRIMES model 2014 Baseline projection, the Fraunhofer ISI Low Policy Intensity Energy Efficiency scenario, and the Green-X model for renewable deployment. Next, the effect of these policies on the natural gas markets is assessed, using the European Gas Market Model. The model tests scenarios for different positions on long-term gas contracts with Russia assuming different stages of European gas infrastructure development. The findings show that dependency on Russian natural gas can be reduced to low levels without triggering a significant increase in natural gas prices for any single EU member country. In an extreme scenario whereby energy efficiency savings, higher renewable energy sources deployment and the assumed positive gas market developments take place simultaneously, gas cost savings can reach as high as 37%. Benefits arise not only in the most recent round of EU Member States (12 MS) targeted in the study, but are visible across most EU gas markets. This underlines the interlinkages of the whole EU gas market, and the results suggest that security of gas supply is not only a challenge for new Member States, but in the broader European markets.

Available at the publisher’s website  

The European Commission has proposed the target of achieving an interconnection capacity of at least 10% of the installed electricity production capacity for each Member State by 2020 in the context of the envisaged Energy Union. The underlying objectives are to increase the security of supply at affordable prices via market integration and to contribute to decarbonization by accommodating an increasing level of renewable generation. In this article we have assessed whether this target could effectively fulfil these two objectives. Our main focus is on the assessment of the impacts of compliance with the 10% interconnection target on the carbon emission of the European electricity system. Our main research question concerns the impact of interconnection capacity increases on EU carbon emission due to the better market integration, disregarding the RES-E integration aspects. In order to arrive at workable scenarios for the future cross-border capacity extension, the security of supply and market integration impacts are also assessed.We concluded on the basis of our European dispatch model that full compliance would slightly increase carbon emission in the EU, ceteris paribus. This impact is due to increased coal- and lignite-based electricity production, mainly in Germany, Poland and the Czech Republic. By increasing the interconnections of these countries with their neighbours at the present low carbon price under the EU emissions trading scheme, these carbon-intensive electricity systems run on higher utilization rates and consequently increase carbon emission. It has to be emphasized that the increase is found for the current situation, and changes in other factors, such as increases in carbon prices or renewable generation, could modify this result.Policy relevanceOur results demonstrate that EU network development and climate policies are highly interconnected. Changing patterns in the interconnections of the EU electricity systems connect diverse generation portfolios and in a low carbon price environment could increase carbon emission at the community level. Policy makers should be aware of the interactions between these areas and design policy tools that also consider negative synergies.

Available at the publisher’s website

The workshop included three sessions of specific thematic focus. The first session provided the “regional picture” with forecasts on the development of the energy and power systems in the western Balkans. The second session discussed case studies on low carbon development trajectories for specific countries in the region; and the third session explored the role of particular technologies in this context. This report comprises of long abstracts from the workshop presentations and closes with a chapter on conclusions and recommendations that resulted from the discussion.

Available at JRC website  

The paper analyses the Hungarian system of district heating, which accounts for 15 per cent of total heat consumption. Both national and European Union s strategy documents aim at achieving sustainable, secure and affordable energy. Hungarian district heating is gauged here on these criteria through a sectoral, bottom-up model with perfect competition. Various policy options are brought in and their impacts assessed on heat production prices and the ratio of renewable based heat production. The results show that investment support and RES heat-bonus options may have positive effects on these output variables in a cost-effective way, but subsidizing consumer district-heating prices and combined heat-and-power (CHP) generation do not yield an optimal solution. Comparing these results with the current Hungarian support system, it emerges that the latter options are applied, through discounted VAT and CHP subsidy. Only a small effort goes on RES DH investment support, and renewable heat-bonus schemes are almost completely absent.

The study is available at the website of the Economic Review 

There is an ongoing policy debate in Europe about how to select natural gas infrastructure projects for an EU-wide investment support scheme. We contribute to this debate by providing a model-based project evaluation method that addresses several shortcomings of the current approach, and by demonstrating its use on a set of shortlisted investment proposals in Central and South Eastern Europe.
Importantly, our selection mechanism deals with the complementarity and the substitutability of new pipelines. We find that a few projects are sufficient to maximize the net gain in regional welfare, but different baseline assumptions favor different project combinations. We also explore the consequences of Russian gas being permanently delivered at the border of the EU on northern and southern routes that avoid Ukraine, and find modest negative welfare effects.

Available at the publisher’s website

Mathematical summary

The paper analyses the complex welfare impacts of proposed transmission investments in the Central Eastern Europe (CEE) region with the application of the EEMM electricity model. This assessment is made at regional level, as new transmission lines have significant spill-over effects over third countries. We carry out a cost-benefit assessment (CBA) focused on the CEE region and demonstrate, that the EEMM model is a suitable tool to carry out such assessment that can satisfy the EU requirements in the field. Using a simplified cost-benefit analysis – limited by the available information on the projects – we mimic the process of identifying those transmission lines that increase the regional welfare the most. In addition, the paper also identifies those methodological and policy issues, that have significant impact on the results, and must be applied consistently during the evaluation process in order to gain robust results in the applied CBA method. Our results indicate that new infrastructure elements cause significant and asymmetric wealth redistribution among group of stakeholders and between countries as well. Interactions between planned transmission line developments must be identified, as they could significantly change the benefits of those lines connecting the interlinked markets.

Available at the publisher’s website  

The European Union’s Energy Efficiency Directive calls for EU Member States to put in place ambitious energy efficiency policies and requires them to establish energy saving targets. One of the most important Articles of the Directive is Article 7, which required Member States to implement Energy Efficiency Obligations and/or alternative policy instruments in order to reach a reduction in final energy use of 1.5% per year. This paper assesses how Article 7 has been applied by Member States and what the implications are. Analysing the plans of all 28 Member States we evaluate how Article 7 is implemented across the EU. This includes an analysis of the types of policies used, the distribution of the anticipated savings across the different policy instruments, and whether or not the way Article 7 is applied in reality meets the requirements set by the Directive. Our analysis shows that Member States take very different approaches with some using up to 112 policy measures and others just one. We also identify areas of concern particularly related to the delivery of the energy savings with respect to the Article 7 requirements, the calculation methods, and the monitoring and verification regimes adopted by Member States. We model to what extent the projected savings are likely to materialise and whether or not they will be sufficient to meet the target put forward by Article 7. In our paper we also make suggestions for modifying the Energy Efficiency Directive in order to address some of the problems we encountered.

Available at the publisher’s website.