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Conference Agenda

Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).

Please note that all times are shown in the time zone of the conference. The current conference time is: 24th Aug 2026, 01:48:40am WEST

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Daily Overview

Session

Thematic Session: Incentives and Policy Distortions in Electricity Markets (Streaming)
Location: B008
Session Chair: Nicolas Astier, Paris School of Economics
Session Chair: Marten Ovaere, University of Gent

Presentation 3

Perverse Curtailments under Two-sided Sliding Feed-in-Premium Contracts

Romain Kremer², Nicolas Astier¹, Laurent Lamy²

1: Paris School of Economics, France; 2: CIRED, France

This article studies an overlooked distortion induced by two-sided sliding Feed-in-Premium contracts, the most widespread support scheme for new large-scale wind and solar projects in Europe. Under such contracts, producers sell their output on the market and bilateral transfers with the State provide some insurance against spot price variability: over a given period, if the average price stands below (above) an auction-determined strike price, the producer receives (pays) the difference for each MWh produced. During periods where the average price exceeds the strike price, the insurance payment is negative and can provide incentives to curtail output even when spot prices are positive. We first show empirically that the magnitude of such ``perverse curtailments'' can be large under extreme market conditions such as the 2022 energy crisis. We next develop a theoretical model to evaluate the equilibrium impacts of perverse curtailments, taking into account their endogenous relationship with both spot prices and insurance payments. We find that equilibrium curtailments can be larger than what our marginal empirical analysis would suggest.