CEEPR Working Paper
2022-006, March 2022
Abdullah Alawad, Pablo Dueñas, Ahmad Alabdulkareem, and Carlos Batlle
Fuel subsidies for fossil generators persist in different electricity markets across five continents. In light of the current European energy crisis, this practice is regaining momentum, as may be the preferred emergency measure to limit the impact of high electricity prices on local demand. In a new Working Paper, the authors propose an innovative bidding format and a slight modification of the regional market clearing algorithm to mitigate a significant portion of the negative impact of the implementation of these subsidies.