Analysis of generation investments under price controls in cross-border trade of electricity

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dc.contributor.authorMuñoz Abogabir, Juan Carlos
dc.contributor.authorSauma, E.
dc.contributor.authorMuñoz, F.D.
dc.contributor.authorMoreno, R.
dc.date.accessioned2024-05-31T15:31:58Z
dc.date.available2024-05-31T15:31:58Z
dc.date.issued2023
dc.description.abstractPrice controls are commonly employed in Latin America and other regions to prevent price increases in exporting regions during cross-border trade of electricity. This paper introduces a methodology to evaluate the economic impact of price controls on generation investments, dispatch decisions, and carbon emissions in the context of cross-border electricity trade. We propose a non-linear adjusting function to represent a price-control rule, which can be incorporated into equilibrium models for generation firms and price-sensitive consumers. By employing fixed-point iterations between the adjusting function and an optimization problem that determines equilibrium investments and dispatch decisions for generation firms in a competitive environment, we obtain an equilibrium solution. We apply the proposed methodology to analyze the current price controls governing cross-border electricity trade between Chile and Argentina, with a focus on the exporting country. Our findings reveal that existing price controls can impede incentives for renewable energy investments, particularly in wind and solar, while stimulating investments in fossil fuel-based generation capacity. Moreover, these controls lead to increased emissions compared to a scenario without price controls. Additionally, we observe that the inefficiency resulting from price controls is proportionate to the volume of exports relative to local demand and the price elasticity of demand in the importing region
dc.fuente.origenORCID
dc.identifier.doi10.1016/j.eneco.2023.106722
dc.identifier.doihttps://sipa.uc.cl/handle/123456789/384401
dc.identifier.eissn1873-6181
dc.identifier.issn0140-9883
dc.identifier.urihttps://doi.org/10.1016/j.eneco.2023.106722
dc.identifier.urihttps://repositorio.uc.cl/handle/11534/86303
dc.information.autorucEscuela de Ingeniería; Munoz Abogabir Juan Carlos; 0000-0003-1775-985X; 75822
dc.language.isoen
dc.nota.accesoContenido parcial
dc.revistaEnergy Economics
dc.rightsacceso restringido
dc.subject.ddc330
dc.subject.deweyEconomíaes_ES
dc.titleAnalysis of generation investments under price controls in cross-border trade of electricity
dc.typeartículo
dc.volumen123
sipa.codpersvinculados75822
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