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dc.contributor.authorRoach, Martin
dc.contributor.authorMeeus, Leonardo
dc.date.accessioned2020-02-19T08:04:53Z
dc.date.available2020-02-19T08:04:53Z
dc.date.issued2020en_US
dc.identifier.issn0140-9883
dc.identifier.doi10.1016/j.eneco.2020.104708
dc.identifier.urihttp://hdl.handle.net/20.500.12127/6434
dc.description.abstractElectricity markets with high installed capacities of Variable Renewable Energy Sources (VRES) experience periods of supply and demand mismatch, resulting in near-zero and even negative prices, or energy spilling due to surplus. The participation of emerging Power-to-X solutions in a sector coupling paradigm, such as Power-to-Gas (PTG), has been envisioned to provide a source of demand flexibility to the power sector and decarbonize the gas sector. We advance a long-run equilibrium model to study the PTG investment decision from the point of view of a perfectly competitive electricity and gas system where each sector's market is cleared separately but coupled by PTG. Under scenarios combining PTG technology costs and electricity RES targets, we study whether or not there is a convergence in the optimal deployment of PTG capacity and what is the welfare distribution across both sectors. We observe that PTG can play an important price-setting role in the electricity market, but PTG revenues from arbitrage opportunities erodes as more PTG capacity is installed. We find that the electricity and gas sector have aligned incentives to cooperate around PTG, and instead find an issue of misaligned incentives related to the PTG actor. Although not the focus of our analysis, in some scenarios we find that the welfare optimal PTG capacity results in a loss for the PTG actor, which reveals some intuition that subsidizing PTG can make sense to reduce the cost of RES subsidies. Sensitivity analyses are conducted to contextualize these findings for system specificities.en_US
dc.language.isoenen_US
dc.publisherElsevieren_US
dc.subjectSector Couplingen_US
dc.subjectPower-to-gasen_US
dc.subjectRenewable Energy Sourcesen_US
dc.subjectMixed Complementarity Problemen_US
dc.titleThe welfare and price effects of sector coupling with power-to-gasen_US
dc.identifier.journalEnergy Economicsen_US
dc.source.volume86en_US
dc.source.beginpage1en_US
dc.source.endpage16en_US
dc.contributor.departmentVlerick Energy Centre, Vlerick Business Schoolen_US
dc.contributor.departmentFlorence School of Regulation, Robert Schumann Centre for Advanced Studies, European University Institute, Via Giovanni Boccaccio, 121, 50133 Firenze, FI, Italyen_US
dc.contributor.departmentKU Leuven, Faculty of Economics and Business, Naamsestraat 69, 3000 Leuven, Belgiumen_US
vlerick.knowledgedomainSpecial Industries : Energyen_US
vlerick.typearticleVlerick strategic journal articleen_US
vlerick.vlerickdepartmentECen_US
dc.identifier.vperid221988en_US
dc.identifier.vperid151626en_US


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