The dynamics of the Swiss electricity market : three essays

Executive Summary Electricity is crucial for modern societies, thus it is important to understand the behaviour of electricity markets in order to be prepared to face the consequences of policy changes. The Swiss electricity market is now in a transition stage from a public monopoly to a liberalised market and it is undergoing an "emergent" liberalisation - i.e. liberalisation taking place without proper regulation. The withdrawal of nuclear capacity is also being debated. These two possible changes directly affect the mechanisms for capacity expansion. Thus, in this thesis we concentrate on understanding the dynamics of capacity expansion in the Swiss electricity market. A conceptual model to help understand the dynamics of capacity expansion in the Swiss electricity market is developed an explained in the first essay. We identify a potential risk of imports dependence. In the second essay a System Dynamics model, based on the conceptual model, is developed to evaluate the consequences of three scenarios: a nuclear phase-out, the implementation of a policy for avoiding imports dependence, and the combination of both. We conclude that the Swiss market is not well prepared to face unexpected changes of supply and demand, and we identify a risk of imports dependence, mainly in the case of a nuclear phase-out. The third essay focus on the opportunity cost of hydro-storage power generation, one of the main generation sources in Switzerland. We use and extended version of our model to test different policies for assigning an opportunity cost to hydro-storage power generation. We conclude that the preferred policies are different for different market participants and depend on market structure.

Generation and interconnection capacity expansion in cross-border electricity markets : the need for policy coordination

Electricity is a strategic service in modern societies. Thus, it is extremely important for governments to be able to guarantee an affordable and reliable supply, which depends to a great extent on an adequate expansion of the generation and transmission capacities. Cross- border integration of electricity markets creates new challenges for the regulators, since the evolution of the market is now influenced by the characteristics and policies of neighbouring countries. There is still no agreement on why and how regions should integrate their electricity markets. The aim of this thesis is to improve the understanding of integrated electricity markets and how their behaviour depends on the prevailing characteristics of the national markets and the policies implemented in each country. We developed a simulation model to analyse under what circumstances integration is desirable. This model is used to study three cases of interconnection between two countries. Several policies regarding interconnection expansion and operation, combined with different generation capacity adequacy mechanisms, are evaluated. The thesis is composed of three papers. The first paper presents a detailed description of the model and an analysis of the case of Colombia and Ecuador. It shows that market coupling can bring important benefits, but the relative size of the countries can lead to import dependency issues in the smaller country. The second paper compares the case of Colombia and Ecuador with the case of Great Britain and France. These countries are significantly different in terms of electricity sources, hydro- storage capacity, complementarity and demand growth. We show that complementarity is essential in order to obtain benefits from integration, while higher demand growth and hydro- storage capacity can lead to counterintuitive outcomes, thus complicating policy design. In the third paper, an extended version of the model presented in the first paper is used to analyse the case of Finland and its interconnection with Russia. Different trading arrangements are considered. We conclude that unless interconnection capacity is expanded, the current trading arrangement, where a single trader owns the transmission rights and limits the flow during peak hours, is beneficial for Finland. In case of interconnection expansion, market coupling would be preferable. We also show that the costs of maintaining a strategic reserve in Finland are justified in order to limit import dependency, while still reaping the benefits of interconnection. In general, we conclude that electricity market integration can bring benefits if the right policies are implemented. However, a large interconnection capacity is only desirable if the countries exhibit significant complementarity and trust each other. The outcomes of policies aimed at guaranteeing security of supply at a national level can be quite counterintuitive due to the interactions between neighbouring countries and their effects on interconnection and generation investments. Thus, it is important for regulators to understand these interactions and coordinate their decisions in order to take advantage of the interconnection without putting security of supply at risk. But it must be taken into account that even when integration brings benefits to the region, some market participants lose and might try to hinder the integration process. -- Dans les sociétés modernes, l'électricité est un service stratégique. Il est donc extrêmement important pour les gouvernements de pouvoir garantir la sécurité d'approvisionnement à des prix abordables. Ceci dépend en grande mesure d'une expansion adéquate des capacités de génération et de transmission. L'intégration des marchés électriques pose des nouveaux défis pour les régulateurs, puisque l'évolution du marché est maintenant influencée par les caractéristiques et les politiques des pays voisins. Il n'est pas encore claire pourquoi ni comment les marches électriques devraient s'intégrer. L'objectif de cette thèse est d'améliorer la compréhension des marchés intégrés d'électricité et de leur comportement en fonction des caractéristiques et politiques de chaque pays. Un modèle de simulation est proposé pour étudier les conditions dans lesquelles l'intégration est désirable. Ce modèle est utilisé pour étudier trois cas d'interconnexion entre deux pays. Plusieurs politiques concernant l'expansion et l'opération de l'interconnexion, combinées avec différents mécanismes de rémunération de la capacité, sont évalués. Cette thèse est compose de trois articles. Le premier présente une description détaillée du modèle et une analyse du cas de la Colombie et de l'Equateur. Il montre que le couplage de marchés peut amener des bénéfices importants ; cependant, la différence de taille entre pays peut créer des soucis de dépendance aux importations pour le pays le plus petit. Le second papier compare le cas de la Colombie et l'Equateur avec le cas de la Grande Bretagne et de la France. Ces pays sont très différents en termes de ressources, taille des réservoirs d'accumulation pour l'hydro, complémentarité et croissance de la demande. Nos résultats montrent que la complémentarité joue un rôle essentiel dans l'obtention des bénéfices potentiels de l'intégration, alors qu'un taux élevé de croissance de la demande, ainsi qu'une grande capacité de stockage, mènent à des résultats contre-intuitifs, ce qui complique les décisions des régulateurs. Dans le troisième article, une extension du modèle présenté dans le premier article est utilisée pour analyser le cas de la Finlande et de la Russie. Différentes règles pour les échanges internationaux d'électricité sont considérées. Nos résultats indiquent qu'à un faible niveau d'interconnexion, la situation actuelle, où un marchand unique possède les droits de transmission et limite le flux pendant les heures de pointe, est bénéfique pour la Finlande. Cependant, en cas d'expansion de la capacité d'interconnexion, «market coupling» est préférable. préférable. Dans tous les cas, la Finlande a intérêt à garder une réserve stratégique, car même si cette politique entraine des coûts, elle lui permet de profiter des avantages de l'intégration tout en limitant ca dépendance envers les importations. En général, nous concluons que si les politiques adéquates sont implémentées, l'intégration des marchés électriques peut amener des bénéfices. Cependant, une grande capacité d'interconnexion n'est désirable que si les pays ont une complémentarité importante et il existe une confiance mutuelle. Les résultats des politiques qui cherchent à préserver la sécurité d'approvisionnement au niveau national peuvent être très contre-intuitifs, étant données les interactions entre les pays voisins et leurs effets sur les investissements en génération et en interconnexion. Il est donc très important pour les régulateurs de comprendre ces interactions et de coordonner décisions à fin de pouvoir profiter de l'interconnexion sans mettre en danger la sécurité d'approvisionnement. Mais il faut être conscients que même quand l'intégration amène de bénéfices pour la région, certains participants au marché sont perdants et pourraient essayer de bloquer le processus d'intégration.

Putting the Special Case in Its Place: Switzerland and Small-N Comparison in Policy Research

This research note presents a set of strategies to conduct small-N comparisons in policy research including the Swiss case. Even though every country can be considered "special" to some extent, the Swiss political system is often viewed as a particularly difficult case for comparison because of the impact of its idiosyncratic institutional features (most notably direct democracy). In order to deal with this problem, our note sets out two possible strategies - the use of functional equivalents and of counterfactual reasoning - and explains how to implement them empirically through process tracing and the establishment of causal chains. As an illustration, these strategies are used for a comparison of the process of electricity market liberalisation in Switzerland and Belgium.

Market-Based Instruments for ecosystem services: institutional innovation or renovation?

Recent years have seen widespread experimentation with market-based instruments (MBIs) for the provision of environmental goods and ecosystem services. However, little attention has been paid to their design or to the effects of the underlying pro-market narrative on environmental policy instruments. The purpose of this article is to analyze the emergence and dissemination of the term "market-based instruments" applied to the provision of environmental services and to assess to what extent the instruments associated are genuinely innovative. The recommendation to develop markets can lead in practice to a variety of institutional forms, as we show it based on the example of payments for environmental services (PES) and biodiversity offsets, two very different mechanisms that are both presented in the literature as MBIs. Our purpose is to highlight the gap between discourse and practice in connection with MBIs.

Avian erythrocytes have functional mitochondria, opening novel perspectives for birds as animal models in the study of ageing.

BACKGROUND: In contrast to mammalian erythrocytes, which have lost their nucleus and mitochondria during maturation, the erythrocytes of almost all other vertebrate species are nucleated throughout their lifespan. Little research has been done however to test for the presence and functionality of mitochondria in these cells, especially for birds. Here, we investigated those two points in erythrocytes of one common avian model: the zebra finch (Taeniopygia guttata). RESULTS: Transmission electron microscopy showed the presence of mitochondria in erythrocytes of this small passerine bird, especially after removal of haemoglobin interferences. High-resolution respirometry revealed increased or decreased rates of oxygen consumption by erythrocytes in response to the addition of respiratory chain substrates or inhibitors, respectively. Fluorometric assays confirmed the production of mitochondrial superoxide by avian erythrocytes. Interestingly, measurements of plasmatic oxidative markers indicated lower oxidative stress in blood of the zebra finch compared to a size-matched mammalian model, the mouse. CONCLUSIONS: Altogether, those findings demonstrate that avian erythrocytes possess functional mitochondria in terms of respiratory activities and reactive oxygen species (ROS) production. Interestingly, since blood oxidative stress was lower for our avian model compared to a size-matched mammalian, our results also challenge the idea that mitochondrial ROS production could have been one actor leading to this loss during the course of evolution. Opportunities to assess mitochondrial functioning in avian erythrocytes open new perspectives in the use of birds as models for longitudinal studies of ageing via lifelong blood sampling of the same subjects.

L'exploitation des eaux souterraines en Syrie centrale : construction de diagnostics et politiques d'intervention

Syrian dry areas have been for several millennia a place of interaction between human populations and the environment. If environmental constraints and heterogeneity condition the human occupation and exploitation of resources, socio-political, economic and historical elements play a fundamental role. Since the late 1980s, Syrian dry areas are viewed as suffering a serious water crisis, due to groundwater overdraft. The Syrian administration and international development agencies believe that groundwater overexploitation is also leading to a decline of agricultural activities and to poverty increase. Action is thus required to address these problems.However, the overexploitation diagnosis needs to be reviewed. The overexploitation discourse appears in the context of Syria's opening to international organizations and to the market economy. It echoes the international discourse of "global water crisis". The diagnosis is based on national indicators recycling old Soviet data that has not been updated. In the post-Soviet era, the Syrian national water policy seems to abandon large surface water irrigation projects in favor of a strategy of water use rationalization and groundwater conservation in crisis regions, especially in the district of Salamieh.This groundwater conservation policy has a number of inconsistencies. It is justified for the administration and also probably for international donors, since it responds to an indisputable environmental emergency. However, efforts to conserve water are anecdotal or even counterproductive. The water conservation policy appears a posteriori as an extension of the national policy of food self-sufficiency. The dominant interpretation of overexploitation, and more generally of the water crisis, prevents any controversary approach of the status of resources and of the agricultural system in general and thus destroys any attempt to discuss alternatives with respect to groundwater management, allocation, and their inclusion in development programs.A revisited diagnosis of the situation needs to take into account spatial and temporal dimensions of the groundwater exploitation and to analyze the co-evolution of hydrogeological and agricultural systems. It should highlight the adjustments adopted to cope with environmental and economic variability, changes of water availability and regulatory measures enforcements. These elements play an important role for water availability and for the spatial, temporal, sectoral allocation of water resource. The groundwater exploitation in the last century has obviously had an impact on the environment, but the changes are not necessarily catastrophic.The current groundwater use in central Syria increases the uncertainty by reducing the ability of aquifers to buffer climatic changes. However, the climatic factor is not the only source of uncertainty. The high volatility of commodity prices, fuel, land and water, depending on the market but also on the will (and capacity) of the Syrian State to preserve social peace is a strong source of uncertainty. The research should consider the whole range of possibilities and propose alternatives that take into consideration the risks they imply for the water users, the political will to support or not the local access to water - thus involving a redefinition of the economic and social objectives - and finally the ability of international organizations to reconsider pre-established diagnoses.