Guo, Bowei*, (2023), "The Spillover Effect of Peak Pricing", Journal of Environmental Economics and Management, Volume 121, September, 102845.
Abstract: Understanding consumer behaviours is important in designing dynamic tariffs, which are usually considered the first-best solution when the conventional flat tariff does not reflect the varying cost of electricity generation. I estimate households’ own- and cross-price elasticities using dataset from a smart metering project, and investigate which household specific characteristics determine the impact of peak prices on electricity consumption. I find peak prices (17:00-20:00) reduce peak and post-peak consumption (20:00-23:00), indicating a spillover effect of peak prices. The underlying mechanisms that could be generating the spillover effect have been further discussed and investigated. Finally, I estimate dynamic tariffs’ distributional and welfare effects, and demonstrate that the spillover effect is crucial in determining the cost effectiveness of a smart metering programme.
Guo, Bowei, and David Newbery*, (2023), "The Cost of Carbon Leakage: Britain's Carbon Price Support and Cross-border Electricity Trade", The Energy Journal, 44 (1), p. 9-31.
Abstract: Carbon taxes create global benefits unless offset by increased emissions elsewhere. An additional carbon tax in one country may cause leakage through imports and will also increase costs by creating a wedge between economic marginal costs in different markets, causing an offsetting deadweight loss. We estimate the global benefit, carbon leakage and deadweight cost of the British Carbon Price Support (CPS) on GB’s cross-border electricity trade with France and The Netherlands. Over 2015-2020 the unilateral CPS created €72±20 m/yr deadweight loss, about 31% of the initial economic value created by the interconnector, or 2.5% of the global emissions benefit of the CPS at €2.9±0.1 bn/yr. About 16.3±3.5% of the CO2 emissions reduction is undone by France and The Netherlands, the monetary loss of which is about €584±127 m/yr.
Guo, Bowei*, and Melvyn Weeks, (2022), "Dynamic Tariffs, Demand Response, and Regulation in Retail Electricity Markets", Energy Economics, Volume 106, February, 105774.
Abstract: Greater penetration of renewables in electricity generation will result in high variability in residual demand (demand net of renewable generation); this will further challenge the stability and flexibility of power systems. One possible solution is demand response, which is usually achieved through dynamic tariffs that offer consumers financial incentives to shift or reduce peak load to off-peak periods. We construct a two-stage dynamic game to model the retail market, in which the retailer sets dynamic tariffs to maximize profit, and consumers respond to the prices. Using the Irish smart metering data as model inputs, we find that in our baseline scenario, the dynamic tariff would generate for the retailer an additional €7.35 of annual profit from a representative Irish household. With market regulations, the dynamic tariff will benefit consumers and retailers alike. We also find that the interaction between demand-side management stimuli and market regulation can further reduce consumer-level electricity demand, increase retail profit, and lower consumers’ electricity bills.
Guo, Bowei*, and Giorgio Castagneto Gissey, (2021), "Cost Pass-through in the British Wholesale Electricity Market", Energy Economics, Volume 102, October, 105497.
Abstract: Cost pass-through (CPT) rates give a useful perspective of market competition. This article studies how input costs of electricity generation are passed through to the wholesale price in Great Britain between 2015 and 2018. Our empirical results fail to reject the null hypothesis of 100% CPT rates for gas costs and EUA prices (and coal costs for most hours), suggesting a competitive British wholesale electricity market in most hours. We observe a higher CPT rate for coal costs in peak and off-peak periods. This is due to coal plants usually bidding at rates somewhat lower than marginal costs during off-peak periods in order to dispatch at their minimum load to avoid the costs of shutting down and starting back up. Instead, during peak periods the rate of capacity utilisation is high and marginal coal plants tend to exercise their market power, resulting in a higher CPT rate for coal costs. We extend the argument by assessing coal plants’ bidding and find evidence of coal plants exercising market power in hours with high residual demand, generating extreme prices.
Chyong, Kong Chyong, Bowei Guo, and David Newbery*, (2020), "The Impact of a Carbon Tax on the CO2 Emissions Reduction of Wind", The Energy Journal, 41 (1), p. 1-32.
Abstract: Energy policy aims to reduce emissions at least long-run cost while ensuring reliability. Its effecacy depends on the cost of emissions reduced. Britain introduced an additional carbon tax (the Carbon Price Support, CPS) for fuels used to generate electricity that by 2015 added ₤18/t CO2, dramatically reducing the coal share from 41% in 2013 to 6% in 2018. Policies have both short and long-run impacts. Both need to be estimated to measure carbon savings. The paper shows how to measure the Marginal Displacement Factor (MDF, tonnes CO2 /MWh) for wind. The short-run (SR) MDF is estimated econometrically while the long-run (LR) MDF is calculated from a unit commitment model of the GB system in 2015. We examine counter-factual fuel and carbon price scenarios. The CPS lowered the SR-MDF by 7% in 2015 but raised the LR-MDF (for a 25% increase in wind capacity) by 18%. We discuss reasons for the modest differences in the SR- and LR-MDFs.
宋枫, 兰梓艺, 郭伯威, 崔健*.电价市场化改革与市场势力——基于成本传导率视角的经验证据.《管理世界》, 2025年第11期, 43-68.
——Song, Feng, Ziyi Lan, Bowei Guo, and Jian Cui*, (2025), "Electricity Price Marketization Reform and Market Power: Evidence from a Cost Pass-through Perspective", Management World (the top Chinese management journal), (11), 43-68.
内容提要：深化能源管理体制改革是构建高水平社会主义市场经济体制的重要内容。本文从成本传导率视角切入，评估自 2015 年新一轮电力市场改革以来价格市场化形成机制与竞争性市场的建设成效。首先，构建电力市场成本—价格传导的理论分析框架，考察电力市场成本传导率如何受到市场竞争程度、需求价格弹性和边际成本弹性等因素的影响；然后，利用广东省电力市场小时级别的高频市场出清数据和发电机组微观数据，量化估计成本传导率。研究发现，电力价格能够显著地传导发电成本，成本传导率约为 55.7%，经过一系列稳健性检验后上述结论依然成立。这一结果表明，电力市场化价格形成机制已经初步建立，能够实现成本有效传导，但市场结构更偏向非竞争性。分成本类型看，电力价格能够显著传导燃料成本，传导率达到54.8%；尽管对碳排放成本的传导率也达到 42.9%，但统计上并不显著。进一步分析发现，在市场竞争程度更高、需求价格弹性更小、边际成本弹性更低的时段，成本传导率更高。本研究对于完善电力市场建设、推动电碳协同发展、提升电力行业监管效能、加快构建新型电力系统具有重要的政策启示。
郑新业, 吴施美, 郭伯威*. 碳减排成本代际均等化: 理论与证据.《经济研究》, 2023年第2期, 107-123.
——Zheng, Xinye, Shimei Wu, and Bowei Guo*, (2023), "Intertemporal Parity of Carbon Emission Reduction Costs: Theory and Evidence", Economic Research Journal (the top Chinese economics journal), (2), 107-123.
内容提要：碳中和目标下减排任务的远近统筹是中国实现经济高质量发展的重要议题。本文基于霍特林法则，以代际贴现效用之和最大化为目标，减排总量为约束，构建代际减排模型。研究发现减排代际均等化是使社会总效用最大化的必要条件，即减排的边际效用、净收益（影子价格）以及碳排放价格的现值在不同时期均应相等。进一步分析了温升目标、贴现率、技术进步等相关参数变化对减排路径以及碳定价的影响。最后，以中国为研究对象，探究了为实现碳中和的最优减排路径，提出应当在前期少减排，将更多的减排任务留给后期，从而将碳中和目标伴生的经济损失控制在国内生产总值（gross domestic product，GDP）的 0.2%-0.4%，并基于此探讨了不同减排轨迹下的产业结构调整路径。