Seminars & webinars
14 December, 2020

Online Seminar | Optimal regulation of energy network expansion when costs are stochastic


Where: online
Location:

GoToMeeting

Event's Timetable:

December 14, 2020 - h 2:30 PM

Information:

To participate please register here

Speaker:

Prof. Gijsbert T. J. Zwart
University of Groningen

introduced by

Prof. Sergio Vergalli
Fondazione Eni Enrico Mattei, University of Brescia, IAERE 

Abstract

In the study “Optimal regulation of energy network expansion when costs are stochastic”, the authors analyze optimal regulation of the gradual investments in energy networks necessary to accommodate the energy transition. They focus on a real option problem where costs of new network technology are stochastic and not observable to the regulator. They solve for the regulatory scheme that optimally balances timely investments with rent extraction in this dynamic agency context. Then, they apply this methodology to a situation in which investment can be either in traditional network technology, with observable costs, or using an innovative network technology for which there is asymmetric information on costs. The optimal choice trades off the potential benefits of cheaper expansion with the costs of overcoming information frictions.

Online Seminar | Optimal regulation of energy network expansion when costs are stochastic

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