Chloé Lecoq

 

« As electricity systems become more interconnected and reliant on variable renewable energy, cross-border solidarity rules act as risk-sharing mechanisms shaping both crisis outcomes and ex ante investment incentives. We develop a model of interconnected countries facing stochastic supply shortages and compare two solidarity designs used in EU energy law: a capacity-based rule (electricity), where support depends on the assisting country’s capacity, and a loss-based rule (gas), where support is tied to the affected country’s shortage. These rules generate a fundamental scale–parity trade-off. The loss-based rule increases aggregate green investment but amplifies cross-country disparities, while the capacity-based rule reduces disparities at the cost of lower investment. We show that the optimal rule depends on asymmetries in endowments and supply risks: with moderate asymmetries, loss-based solidarity dominates, whereas with large or concentrated asymmetries, capacity-based rules can dominate by limiting divergence and moral hazard. 

 

 

 

 

 

– Séminaire organisé par le programme 4 / BSE –

 

 

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