Research Area 3, Economic analysis, uses economic theory to study incentive mechanisms promoting sustainable energy usage and production.
The research area applies economic theory to analyse how market and pricing mechanisms, policy measures, and regulatory policies can be and are designed to promote an efficient and environmentally sustainable use and production of energy. RA3 analyses also regional and urban effects of economic and environmental policy measures.
3.1 Electricity market design and economic incentives addresses how pricing and market mechanisms can be designed to promote economic and environmental efficiency in electricity markets facing challenges of increased shares of intermittent renewables and enhanced demand for balancing services. The focus is on incentives and signals of individual mechanisms as well as on their interaction.
3.2 National policy: Regulation, incentives and efficiency analyses policy instruments such as taxes, subsidies and regulation from an economic perspective. The focus is on objectives and on specific policy measures, taking account of dynamics and interaction within Europe and globally. Furthermore, Norwegian and European climate policies will be analysed in the context of non-global participation, examining the effect of national costs and gains, expectation formation and how expectations influence R&D, and the role of leadership.
3.3 Regional economic implications of energy policies analyses the effects of policy measures and future development in a regional economic context. Important elements here are spatial issues such as the geographical distribution of production and consumption of energy, mobility and the urban environment. A workhorse in this analysis will be an economic model linked to energy system models.