In this paper, we examine the use of carbon pricing and an output-based subsidy in a market with imperfect competition …. In the first phase, the carbon price is doubled with the output subsidy being based on a fraction of facility …-level emission intensity. In the second phase, the carbon price will remain constant, while the output subsidy is altered to be …

high availability. Moreover, the subsidy scheme is substantially more complex than a first-best Pigouvian tax. The optimal … renewable subsidy is always positive but tends to decrease as electricity production becomes less reliant on fossils. The … optimal storage subsidy even changes its sign. It is usually negative as long as fossils contribute to filling the storage …

high availability. Moreover, the subsidy scheme is substantially more complex than a first-best Pigouvian tax. The optimal … renewable subsidy is always positive but tends to decrease as electricity production becomes less reliant on fossils. The … optimal storage subsidy even changes its sign. It is usually negative as long as fossils contribute to filling the storage …

and storage capacities when carbon pricing is imperfect. The subsidy rate for renewables decreases as electricity … production becomes less reliant on fossils. The storage subsidy is usually negative as long as fossils contribute to filling the …-trip efficiency losses during a storage cycle. A numerical simulation illustrates that substantial subsidy payments are required even …