Research
In my research, I apply tools of industrial organization to energy and environmental economics. I specialize in electricity market design, but other research interests include industrial decarbonization, climate policy and international economics.
Working Papers
Designing Second-Best Price Zones in Electricity Markets [PDF]with Sebastian Schwenen
Abstract
In electricity markets, marginal costs vary substantially across space and time, implying welfare losses under spatially or temporally uniform pricing. In practice, prices are typically aggregated into large zones with spatially uniform prices. This paper develops an empirical framework to quantify the welfare loss of zonal pricing and to design welfare-improving price zones. We propose the spatial R-squared as a measure of spatial market efficiency and show that economically motivated clustering methods recover efficiency-maximizing zones. Applying the framework to three U.S. wholesale electricity markets, we demonstrate its computational tractability and find that existing zones are misaligned with current network conditions.
Abstract
Many countries intend to electrify most of their energy consumption in the near future, which can raise the flexibility of electricity consumption significantly. To unlock this flexibility potential, consumers require appropriate price signals, achieved through real-time pricing (RTP) contracts. Building on the stylized market model of Borenstein and Holland (2005), this paper identifies potential barriers to the adoption of RTP. We find substantial synergies between RTP and flexibility of consumption. As flexibility increases, so does the adoption of RTP. However, this relationship weakens if consumers’ electricity bills are dominated by non-energy components such as grid fees, taxes, and retail markups. When these costs are substantial, RTP becomes less attractive and adoption remains limited.
with Leon Stolle, Benjamin F. Hobbs, Karsten Neuhoff
Abstract
Locational marginal pricing (LMP) provides efficient locational dispatch and investment signals but requires a complementary congestion hedging instrument to function effectively. This paper investigates how exposure to locational price differences is managed in North American nodal electricity markets through the implementation of financial transmission rights (FTRs). Drawing on insights from 15 industry experts directly involved across all major North American electricity markets, we consolidate first-hand perspectives that reveal the practical complexities of FTR design and implementation. While most interviewees view FTRs positively, their experiences uncover multiple nuanced challenges to successfully design locational hedging instruments, which are often overlooked in the academic literature. As FTR design depends on market characteristics, we apply the findings to the European electricity market and discuss implications for a possible implementation of LMP in Europe.
Work in Progress
Distributional Impacts of Spatially Granular Electricity Prices
Pre-PhD Publications
Böschemeier, J., & Jochem, A. (2024). The effect of foreign carbon prices on German outward FDI. Economics Letters, 234, 111499.
Böschemeier, J., & Mau, K. (2023). Foreign supply shocks and the structure of trade in a small open economy. De Economist, 171(4), 303-342.
Non-refereed Publications
Böschemeier, J. and Mau, K. (2022). Gediversifieerd netwerk van handelspartners helpt schokken op te vangen. Economisch Statistische Berichten, 107(4816):542–544. (Dutch)
Böschemeier, J., Teti, F., Cernicky, J., and Moncayo, G. R. (2022). AfCFTA in a Rut – Can the Pan-African Agreement Regain Momentum? CESifo Forum, 23(02):46–57.
Böschemeier, J. and Teti, F. (2021). Die panafrikanische Freihandelszone AfCFTA–Utopie oder reale Chance? ifo Schnelldienst, 74(10):50–61. (German)