Data and Code for: Start-up Costs and Market Power: Lessons from the Renewable Energy Transition

Principal Investigator(s): View help for Principal Investigator(s) Akshaya Jha, Carnegie Mellon University; Gordon Leslie, Monash University

Version: View help for Version V1

Name	File Type	Size	Last Modified
Code			12/30/2024 03:17:PM
Data			07/25/2024 04:36:PM
Results			07/25/2024 03:45:PM
Data Availability Statement and README.pdf	application/pdf	228.6 KB	12/30/2024 01:50:PM

Project Citation:

Jha, Akshaya, and Leslie, Gordon. Data and Code for: Start-up Costs and Market Power: Lessons from the Renewable Energy Transition. Nashville, TN: American Economic Association [publisher], 2025. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2025-01-07. https://doi.org/10.3886/E208143V1

Project Description

Summary: This is the replication package for Start-up Costs and Market Power: Lessons from the Renewable Energy Transition authored by Akshaya Jha and Gordon Leslie.

Abstract: Firms expect to recover the fixed costs required to start production by earning positive operating profits in subsequent periods. We develop a dynamic competitive benchmark that accounts for start-up costs, showing that static markups overstate the rents attributable to market power in an electricity market where generators frequently stop and start production in response to rooftop solar output. We demonstrate that the large-scale expansion of solar capacity can lead to increases in the collective profitability of fossil-fuel plants because competition softens at sunset---plants displaced by solar during the day must incur start-up costs to compete in the evening.

Scope of Project

Subject Terms: Start-up Costs; Dynamic Production Function; Market Power; Markups; Wholesale Electricity Markets; Renewables; Rooftop Solar; Intermittency

JEL Classification:
      L11 Production, Pricing, and Market Structure; Size Distribution of Firms
      L13 Oligopoly and Other Imperfect Markets
      L94 Electric Utilities
      Q41 Energy: Demand and Supply; Prices
      Q42 Alternative Energy Sources

Geographic Coverage: Western Australia

Time Period(s): 2014 – 2018

Collection Date(s): 4/6/2024 – 4/6/2024 (Data last accessed on 2024-04-06)

Universe: This analysis covers the wholesale electricity market (WEM) covering the south-west of Western Australia via the South West Interconnected System (SWIS).

Data Type(s): administrative records data; observational data

Methodology

Response Rate: These data cover the universe of electricity generating units operating in the WEM covering the SWIS.

Sampling: These data cover the universe of electricity generating units operating in the WEM covering the SWIS.

Data Source: Data provided by the Australian Energy Market Operator (AEMO):

Link: https://aemo.com.au/energy-systems/electricity/wholesale-electricity-market-wem/data-wem/market-data-wa

Bids into the balancing market (website tab = Pre-Reform / Effective Balancing Submission)
Balancing market outcomes (website tab = Pre-Reform / Balancing Market Summary)
Electrical output by generating unit (website tab = Pre-Reform / Facility SCADA)
Outages by generating unit (website tab = Pre-Reform/ Outages)
Bids and offers into the short-term energy market (website tab = Pre-Reform / STEM Bids and Offers)
STEM market outcomes (website tab = Pre-Reform / STEM Summary)

Data provided by the Gas Bulletin Board of Western Australia:

Link: https://gbbwa.aemo.com.au/#reports/largeUserConsumption

Data on daily gas use by large gas facilities in Western Australia

Data provided by the Australian PV Institute:

Links:
https://pv-map.apvi.org.au/postcode (installations, aggregated to two-digit postcode level, 60XX-69XX for WA under the “wildcards” tab of the time-series data chart)

https://pv-map.apvi.org.au/live ([appending “#YYYY-MM-DD” for the relevant date] (performance/capacity factor), then selecting two-digit postcode regions in WA and gathering performance figures from the relevant plotted series.)

Data provided by the Western Australian Department of Mines and Petroleum:

Link: https://www.dmp.wa.gov.au/Documents/Investors/Major-Commodities-2017-2018.xlsx#

Coal details are found on the “Minor Comm.- Quantity and Value” sheet, Gas details from the “Petroleum - Gas Prices” sheet.

Data provided by Sinclair Knight Merz MMA (2014):

Link: https://www.erawa.com.au/cproot/12072/2/Independent%20Market%20Operator%20-%20Submission%20under%20clause%203.13.3A(a)(inclusive%20of%20an%20Independent%20Assessment%20by%20the%20Consultant%20SKM%20MMA.pdf .

Data on electricity generator characteristics that participate in Western Australia’s Wholesale Electricity Market

Data provided by the Australian Government Clean Energy Regulator

Link: https://cer.gov.au/document/sgu-solar-installations-2011-to-present

Data on rooftop solar installations

Collection Mode(s): other

Unit(s) of Observation: Half-hourly unit-level electricity output, Half-hourly STEM and balancing market outcomes, Unit-level characteristics, Daily facility-level gas use, Half-hourly firm level bids into the STEM, Half-hourly unit-level bids into the balancing market, Quarterly data on coal and gas prices

Geographic Unit: Western Australia

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Published Versions

V1 [2025-01-07]

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