dynamic replenishment from two sources with different yields costs and leadtimes abstract we study a single item periodic review inventory system with two sources of supply in house production and outsourcing the two sources differ in yields costs and leadtimes demands in consecutive periods are independent random variables and stockout is fully backlogged our problem is to characterize the optimal dynamic policy that simultaneously determines the in house production quantity and the outsourcing quantity for each period to minimize the total discounted cost we show that the optimal policy for in house production can be characterized by a threshold and the production quantity is decreasing in the starting inventory the optimal outsourcing policy however is more complex and a threshold type policy is only optimal under a more restrictive assumption about the yields comparative statics about the effects of yield uncertainty outsourcing on the optimal policy and cost performance are discussed

exploring the options for carbon dioxide mitigation in turkish electric power industry system dynamics approach electric power industry has a huge carbon mitigation potential fundamentally because there are large carbon free renewable resource options in turkey with growing demand in electricity consumption and incentives offered for natural gas fired electricity generation co2 emissions sourced from electric power industry had tripled over the last two decades current governmental strategy focuses on energy security and resource diversity in a growing economy and does not articulate sufficient mitigation targets and appropriate regulations in this research an original dynamic simulation model is built validated and analyzed to explore the options for carbon mitigation in turkish electric power industry model structure represents the investment dispatch and pricing heuristics as well as the natural resource base of electricity generation in turkey it operates on annual basis over 30 years to simulate installed capacities and generations of power plants with alternative resources and their resulting co2 emissions the analysis presented in this paper reveals that there are mitigation options below 50 of business as usual growth with common policy options such as feed in tariffs investment subsidies and carbon taxes the model can serve as an experimental platform for further analysis of problems related to carbon mitigation in turkish electricity sector

a portfolio risk analysis on electricity supply planning abstract conventional electricity planning selects from a range of alternative technologies based on the least cost method without assessing cost related risks the current approach to determining energy generation portfolios creates a preference for fossil fuel consequently this preference results in increased exposure to recent fluctuations in fossil fuel prices particularly for countries heavily depend on imported energy this paper applies portfolio theory in conventional electricity planning with taiwan as a case study the model objective is to minimize the risk weighted present value of total generation cost both the present value of generating cost and risk variance of the generating cost are considered risk of generating cost is introduced for volatile fuel prices and uncertainty of technological change and capital cost reduction the impact of risk levels on the portfolio of power generation technologies is also examined to provide some valuable policy suggestions study results indicate that replacing fossil fuel with renewable energy helps reduce generating cost risk however due to limited renewable development potential in taiwan there is an upper bound of 15 on the maximum share of renewable energy in the generating portfolio in the meantime reevaluating the current nuclear energy policy for reduced exposure to fossil fuel price fluctuations is worthwhile

photovoltaic electricity production in brazil a stochastic economic viability analysis for small systems in the face of net metering and tax incentives abstract currently in addition to the search for sustainable development there is increased pressure for a change in consumption and production of energy patterns in brazil in this scenario net metering is an important mechanism fostering dissemination of small photovoltaic pv solar systems as complementary support to net metering a tax exemption is currently being offered in some brazilian states thus the objective of the present study is to analyze the impact of tax exemption on the circulation of goods and services and the returns and risks of the pv microgeneration project in four cities located in different regions of brazil belem petrolina uberaba and uruguaiana the analysis is performed using the monte carlo simulation mcs wherein uncertainties related to the financial and environmental variables are considered the results of the stochastic economic viability analysis allowed us to conclude that the exemption of tax on circulation of goods and services icms is fundamental to make pv microgeneration viable in brazil in the cities analyzed pv microgeneration presented economic unfeasibility to the investor when the icms is charged when considering the icms exemption policy the cities of petrolina and belem obtained high probabilities of viability in relation to the risk analysis pv microgeneration obtained the best results in petrolina both in terms of the condition of collection and exemption of icms there is high potential for harness solar throughout the brazilian territory however due to the current evolution stage and the productive chain of the brazilian pv industry high costs limit the expansion of this clean energy generation technology the findings of this study could assist policymakers in evaluating this incentive program highlighting that this tax exemption directly meets one of the objectives for which the icms was created which is to encourage the development of productive sectors such as pv industry

electricity auctions in south america towards convergence of system adequacy and res e support regulatory reforms of the electricity industry in south america have always been prompted by the need of attracting enough investment to cover the fast paced demand growth in order to achieve this goal the countries in the region which in the eighties and early nineties opted for market oriented schemes have rebuilt in the last decade their regulatory frameworks around long term auctioning these new mechanisms initially implemented to attract investment in any sort of conventional generation technology so as to ensure the system adequacy are increasingly being also used to bring in non conventional renewable energy resources these schemes have been until now run in parallel but the steep learning curve of renewable energy sources for electricity res e technologies is apparently opening the door to the implementation of new tendering procedures open to all kinds of generation technologies in this article we review the auction mechanisms for new generation implemented in south america we argue that although the first impression might lead to the conclusion that conventional and res e technologies are in some cases close and even ostensibly competing in the same auctions the fact is that the full convergence is still far to happen as the rules and products applied to the different technologies differ significantly

risk aversion liquidity and endogenous short horizons we analyze a competitive model in which different information signals get reflected in value at different points in time if investors are sufficiently risk averse we obtain an equilibrium in which all investors focus exclusively on the short term in addition we show that increasing the variance of informationless trading increases market depth but causes a greater proportion of investors to focus on the short term signal which decreases the informativeness of prices about the long run finally we also explore parameter spaces under which long term informed agents wish to voluntarily disclose their information article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

a periodic review lot sizing problem with random yields disruptions and inventory capacity this paper examines a periodic reviewed lot sizing problem with random yields disruptions and limited inventory capacity to characterise the continuous production an additive random yield model is considered rather than a multiplicative one disruptions cause breakdowns to production inventory capacity is included since the production has to be shut down when the inventory buffer is full both disruptions and shutdowns lead to a start up cost and a stochastic lead time to recover the production these compound factors of uncertainty are encountered in practical planning decisions in process industries we review the existing random yield models which are then compared with the additive model with a linear production cost the additive model has an order up to policy to be optimal disruptions deteriorate the expected actual production quantity and the fill rate dramatically even though the optimal order up to level increases compared with the cases of no disruption considering inventory capacity makes the problem to be a non convex dynamic programming problem numerical analysis shows that the performance is dramatically deteriorated when the inventory capacity is rather tight which indicates the importance of selecting a proper inventory capacity to reduce the negative impacts and avoid redundant investment on capacity moreover the start up cost plays an important role in determining the level of inventory capacity

inventory management with random supply and imperfect information a hidden markov model in most of the papers on inventory models operating in a random environment the state of the environment in each period is assumed to be fully observed with perfect information however this assumption is not realistic in most real life situations and we provide a remedy in this paper by assuming that the environment is only partially observed with imperfect information we accomplish this by analyzing two formulations of single item models with periodic review and random supply in a random environment in the first one supply is random due to random capacity of production and random availability of transportation we show that state dependent base stock policy is optimal if the capacity and all costs are observed while demand and availability are unobserved in the second model we consider a model with random availability only with fixed ordering cost we show that state dependent s s policy is optimal if the availability process is observable

diversification under yield randomness in inventory models abstract in this paper we consider the case of random yield and diversification in two different inventory models it is assumed that two sources suppliers exist who ship an amount which is a random function of the amount requisitioned since they may charge different prices and their reliability in terms of the variance of the yield random variable may be different diversification may be more desirable than using a single supplier we analyze this problem for both the eoq model and the newsboy model analytic results for the optimal order quantities and the minimum cost are obtained for the eoq model convexity of the objective function is also discussed we develop the necessary conditions for the newsboy model and propose an approximate solution technique the concavity of the expected profit function is shown numerical examples are provided for both models

the privatization of eeb from cash drain to major contributor in this paper we describe the successful part privatization of empresa de energia de bogota eeb the city owned electricity company in bogota colombia we describe the reason the preparation and the actual sale process as well as the outcome following the part privatization eeb went from being a company on the edge of bankruptcy to one of the most financially secure electricity companies in south america we also place the case in relation to the standard views on direct foreign investment and their social benefit finally we aim to generalize the experience to see what other organizations in a similar position can learn

renewables and climate change mitigation irreversible energy investment under uncertainty and portfolio effects abstract ongoing negotiations under the unfccc center around the possibilities for stabilization of greenhouse gases at a safe level new energy technologies are assumed to make major contributions to this goal however in the light of scientific uncertainty e g about climate sensitivity feedback effects etc market uncertainty e g fuel price volatility technological uncertainty e g availability of renewable technology socio economic uncertainty e g development of different macroeconomic factors and policy uncertainty e g about commitment to specific targets and stability of co2 prices it is difficult to assess the importance of different technologies in achieving robust long term climate risk mitigation one example currently debated in this context is biomass based energy which can be used to produce both carbon neutral electricity and at the same time offer the possibility of negative emissions by capturing carbon from biomass combustion at the conversion facility and permanently storing it in this study we analyze the impact of uncertainty on investment decision making at the plant level in a real options valuation framework and then use the ggi scenario database iiasa 2009 as a point of departure for deriving optimal technology portfolios across different socio economic scenarios for a range of stabilization targets focusing in particular on the new low emission targets using alternative risk measures

rural electrification and energy poverty empirical evidences from brazil the aim of this article is to evaluate the impact of rural electrification on the reduction of energy poverty in brazil through the analysis of 23 000 rural domiciles or rural properties between the years 2000 and 2004 the results indicate a fast change in the profile of energy consumption and a reduction of energy poverty this new approach works as a complement among other variables to analyze and quantify the real economic social and energy impacts in rural electrification programs generally applied in developing countries

how capacity mechanisms drive technology choice in power generation the case of colombia abstract colombia enacted its first legal framework for promoting alternative energies in 2001 and a second framework in 2014 since the generation technology mix has not changed since 2000 there is a need to understand how regulation and market structure affect the adoption of technologies in this paper we address the question of what has been the impact of the capacity mechanisms adopted during the 2000s on technology choices for power generation in colombia our approach is to analyze the evolution of market structure and regulation we found that regulatory uncertainty and low prices drove a surge of small hydro plants during the 2000s during the 2010s the new regulatory focus on reliability of supply has resulted in increased coal fueled generation and large hydro this increased reliance on hydro power can further delay the entry of renewable technologies and the diversification of the colombian portfolio

renewable energy technology diffusion an analysis of photovoltaic system support schemes in medellin colombia abstract colombia s electricity mix is dominated by hydropower which constitutes over 65 percent of the installed capacity the country has important potential for introducing solar photovoltaic sources into its electricity generation mix given its high average annual insolation however there is a lack of incentives and support schemes for alternative renewable energy technologies this paper analyzes the diffusion of a photovoltaic system in colombia with a focus on medellin colombia s second largest city a diffusion model is constructed based on the classic bass diffusion theory where the adoption rate is a function of awareness raising campaigning and social interaction the model incorporates both subsidy and feed in tariff policies policy implementation scenarios and the effects of policy mixes are analyzed results show that a 50 percent subsidy for investment together with a usd 0 30 kwh feed in tariff rate jointly provide the highest marginal increase in diffusion rate however given the cheapness of the country s current hydroelectric resources photovoltaic system diffusion might remain a challenge for both the government and private sectors for the foreseeable future

viable allocations of information in financial markets abstract we study in the context of a financial market allocations of information that are consistent with endogenous information acquisition we focus on whether information is concentrated within a fraction of the market or is diffuse the aggregation of information in prices tends to make signals more complementary than they would be if considered in isolation favoring concentration of information however the ability to use some signals together with prices to predict other signals may increase the degree of substitutability among signals we present conditions under which each of these effects is particularly strong

wind power generation an impact analysis of incentive strategies for cleaner energy provision in brazil brazil has adopted various strategies to encourage alternative renewable energy sources in pursuit of cleaner and sustainable energy production to this end strategies should support the reduction of the financial risk for potential investors in the renewable energy market therefore this study aims to analyze the impact of incentive strategies on the financial risk of wind power generation projects in brazil in different marketing environments from a quantitative approach using monte carlo simulation in three scenarios we evaluate the impact of funding from the national development bank and participation in the clean development mechanism in the financial returns of the investor in a regulated contracting environment and free contracting environment measured by the net present value we conduct a statistical analysis to find out if there were statistically significant differences in investor risk in each scenario the main results of the study are as follows the wind speed the selling price of energy and disbursement for the investment have the most significant impact on the financial return the project viability probability is greater than 85 in all scenarios regardless of the marketing environment the regulated market is less risky for the producer than the free market since there is a statistically significant difference in net present value variances for all scenarios in the regulated contracting environment funding is critical to reducing risk and carbon credit trading is not a suitable policy for providing financial security to renewable energy producers thus we conclude that in brazil the contracting of projects from auctions in the regulated contracting environment with the support of the national development bank has been important for neutralizing the producer s financial risks

an assessment of wind power prospects in the brazilian hydrothermal system abstract despite the need to reduce greenhouse gases thermoelectric power plants were the main winners in electricity auctions held until 2009 this study evaluates the possibility of improving the prospects of increasing the clean and renewable energy mix the new official energy plan for 2030 prepared for the brazilian government by the energy research company epe 1 forecasts a relative increase in thermal generation using natural gas coal and nuclear energy in contrast to this plan this study considers wind generation as a complement to hydropower rather than fossil and nuclear energy previously the analysis of seasonal complementarities in brazil between average inflow hydraulic energy anah and average inflow wind energy anaw has been generally focused on an intra annual period however in this study an initial effort is made to analyze the multiannual complementarities of the two sources the wind technology learning curve in brazil and worldwide was investigated and the results show the potential of competitiveness of wind power compared with other sources such as nuclear power gas and coal the replacement of thermal based expansion by wind power was simulated by a comparative analysis of the net present value npv of fuel operation maintenance and capital costs including the potential learning time of both scenarios the npv results indicate that the total costs of wind generation represent 57 of the total thermal costs showing its potential attractiveness and that it facilitates the reduction of the emission of greenhouse gases taking into account the population and the stabilization of energy demand in the 2040s the possibility of meeting the energy demand of brazil through renewable and sustainable energy sources mainly hydropower and wind power is demonstrated

using real option analysis for highly uncertain technology investments the case of wind energy technology this study examines the feasibility of using a theoretical model and empirical analysis methods to value renewable energy re investment from perspective of real option analysis roa based on use of a roa approach the re value is evaluated with respect to its ability to conform to the main sensitivity analysis of re investment as well as an empirical method devised to value re investment by using actual data the economic intuitiveness underlying the decision making process for re investment is elucidated while empirical analysis is performed to demonstrate the effectiveness of the options value embedded in current development planning in taiwan for wind energy in addition to revealing the advantages of re development when considering real option analytical results indicate that roa is a highly effective means of quantifying how investment planning uncertainty including managerial flexibility influences re development besides evaluating the value of current re investment this study demonstrates that results of the theoretical model empirical analysis and sensitivity analysis correlate well with each other restated the value of developing re increases when increasing the underlying price time to maturity risk free rate and volatility conversely the value of developing re decreases when increasing the exercise price

optimizing the level of renewable electric r d expenditures using real options analysis abstract one of the primary objectives of the united states federal non hydro renewable electric r d program is to promote the development of technologies that have the potential to provide consumers with stable and secure energy supplies in order to quantify the benefits provided by continued federal renewable electric r d this paper uses real option pricing techniques to estimate the value of renewable electric technologies in the face of uncertain fossil fuel prices within the real options analysis framework the current value of expected future supply from renewable electric technologies net of federal r d expenditures is estimated to be 30 6 billion of this value 86 can be attributed to past federal r d efforts and 14 can be attributed to future federal r d efforts assuming continued federal r d funding at 300 million yr in addition real options analysis shows that the value of renewable electric technologies increases as current and future r d funding levels increase this indicates that the current level of federal renewable electric r d funding is sub optimal

auction approaches of long term contracts to ensure generation investment in electricity markets lessons from the brazilian and chilean experiences the implementation of auctions of long term electricity contracts is arising as an alternative to ensure generation investment and therefore achieve a reliable electricity supply the aim is to reconcile generation adequacy with efficient energy purchase correct risk allocation among investors and consumers and the politico economic environment of the country in this paper a generic proposal for a long term electricity contracts approach is made including practical design concepts for implementation this proposal is empirically derived from the auctions implemented in brazil and chile during the last 6 years the study is focused on practices and lessons which are especially useful for regulators and policy makers that want to facilitate the financing of new desirable power plants in risky environments and also efficiently allocate supply contracts among investors at competitive prices although this mechanism is generally seen as a significant improvement in market regulation there are questions and concerns on auction performance that require careful design and which are identified in this paper in addition the experiences and proposal described can serve to derive further mechanisms in order to promote the entrance of particular generation technologies e g renewables in the developed world and therefore achieve a clean electricity supply

security of electricity supply at the generation level problem analysis abstract since the very beginning of the restructuring process back in 1982 in chile the ability of an electricity market to provide the system with the required level of security of supply has been put into question the mistrust on the ability of the market left to its own devices to provide sufficient generation availability when needed is more and more leading to the implementation of additional regulatory mechanisms this matter is undoubtedly gaining importance and it has taken a key role in the energy regulators agendas in this paper we revisit this discussion under the light of thirty years of electricity market experience we analyze the different reasons why although ideally the market is supposed to provide itself an adequate security of supply at the generation level this result is still far from being achieved in practice

stochastic comparisons in production yield management manufacturing firms routinely commit resources to increase yield rates through product and process improvement initiatives champions of such yield improvement projects may assume that stochastically larger yield rates are beneficial in this note we show that this need not hold even when the contingent production lot sizes are chosen optimally we employ stochastic comparison techniques to show that a yield rate that is smaller in the convex order ensures higher expected profit and we provide a distribution free bound on the size of increase in expected profit we also identify properties of yield rate distributions that do make stochastically larger yield rates beneficial

optimal wind power deployment in europe a portfolio approach geographic diversification of wind farms can smooth out the fluctuations in wind power generation and reduce the associated system balancing and reliability costs the paper uses historical wind production data from five european countries austria denmark france germany and spain and applies the mean variance portfolio theory to identify cross country portfolios that minimise the total variance of wind production for a given level of production theoretical unconstrained portfolios show that countries spain and denmark with the best wind resource or whose size contributes to smoothing out the country output variability dominate optimal portfolios the methodology is then elaborated to derive optimal constrained portfolios taking into account national wind resource potential and transmission constraints and compare them with the projected portfolios for 2020 such constraints limit the theoretical potential efficiency gains from geographical diversification but there is still considerable room to improve performance from actual or projected portfolios these results highlight the need for more cross border interconnection capacity for greater coordination of european renewable support policies and for renewable support mechanisms and electricity market designs providing locational incentives under these conditions a mechanism for renewables credits trading could help aligning wind power portfolios with the theoretically efficient geographic dispersion 2009 elsevier ltd

investment timing and optimal capacity choice for small hydropower projects this paper presents a method for assessing small hydropower projects that are subject to uncertain electricity prices we present a real options based method with continuous scaling and we find that there is a unique price limit for initiating the project if the current electricity price is below this limit it is never optimal to invest but above this limit investment is made according to the function for optimal size the connection between the real option and the physical properties of a small hydropower plant is dealt with using a spreadsheet model that performs a technical simulation of the production in a plant based on all the important choices for such a plant the main results of the spreadsheet are simulated production size and the investment costs which are in turn used for finding the value of the real option and the price limit the method is illustrated on three different norwegian small hydropower projects

a real option analysis of investments in hydropower the case of norway abstract this paper presents a valuation study of hydropower investment opportunities in the norwegian context according to nve norwegian water resources and energy directorate the regulator there is a potential of 39 twh not yet developed generation in a normal year is approximately 120 twh by using the conceptual real option framework of dixit and pindyck 1994 investment under uncertainty princeton university press princeton nj one can estimate the value of investment opportunities to nok 11 million gwh eur 1 4 million gwh furthermore the optimal trigger price for initiating an investment based on electricity forward prices is calculated to nok 0 32 kwh eur 0 04 kwh the analysis shows consistency between real option theory and aggregate investment behaviour in norwegian hydropower

systemic value of electricity sources what we can learn from the brazilian experience abstract the competitiveness of electricity sources is traditionally estimated by levelized cost of electricity lcoe compared to the average electricity price however the introduction of variable renewable energy sources vres in power systems has evidenced that time location and availability are essential to set the marginal value of electricity sources overcoming the narrow view of costs for a broad value approach the literature recognizes that the source comparison must consider the expected marginal value of each alternative which evolves over time due to sources penetration and system development changing static and dynamic integration costs the paper presents the brazilian experience as forerunner case study for the literature on systemic value as the country has established a pioneering benefit cost index bci to compare different sources in centralized expansion auctions which contracted 100 gw of installed capacity the bci analysis is based on hydro predominance recognizing only static integration costs backward looking approach nevertheless the brazilian system is evolving towards higher short term variability due to the loss of regularization of hydro reservoirs limitations to hydropower expansion and vres penetration the expansion and operation of the power system are not sensitive to ongoing changes neglecting dynamic integration costs which must be incorporated in a forward looking perspective

cycles in deregulated electricity markets empirical evidence from two decades abstract in this article we discuss the cycle hypothesis in electricity generation which states that the introduction of deregulation in an electricity system might lead to sustained fluctuations of over and under capacity the occurrence of cycles is one of the major threats for electricity markets as it affects the security of supply and creates uncertainty in both the profitability of electricity companies and in consumer prices we discuss the background for these cycles using analogies with other capital intensive industries along with evidence from the analysis of behavioral simulation models as well as from experimental electricity markets using data from the oldest deregulated markets we find support for the hypothesis in the case of the english and chilean markets based on an autocorrelation analysis evidence from the nordpool market is more ambiguous although we might be observing the first half of a cycle in generation capacity comparing a simulation of the english market performed in 1992 with the actual performance we can observe that the qualitative behavior of the model is consistent with the actual evolution finally we discuss possible mechanisms for damping cycles in electricity generation such as mothballing capacity payments and reliability markets

development challenges under the clean development mechanism cdm can renewable energy initiatives be put in place before peak oil abstract the sustainable development aspect of the clean development mechanism cdm under the kyoto protocol is examined with regard to its current impact on crucial developmental issues the paper discusses the immediate and urgent global concerns of developmental needs energy and climate change whilst highlighting their influence on the poor in the developing world the global responses to address the above concerns in terms of renewable energy technologies policies and strategies that can be instrumental in addressing the issues are discussed with main emphasis on the cdm under the kyoto protocol the critical issue of whether the cdm can address poverty alleviation and sustainable development in developing countries is discussed in the context of existing market principles transparency of the mechanism economics and the daunting bureaucratic procedures involved the paper concludes that the cdm if suitably modified can go some way to address sustainable development and alleviate poverty for poor rural areas and not increase emissions by a focus on renewable energy technologies this result can be achieved as the energy consumption of rural sectors is currently so small relative to developed economies that only small additional renewable energy generation capacities are needed to make a measurable difference

the role of distribution network operators in promoting cost effective distributed generation lessons from the united states of america for europe abstract this paper explores the different competitive mechanisms applied by electric utilities from the us in promoting cost effective distributed energy resources der with a focus on distributed generation dg and the challenges that electric utilities are facing due to the increase in dg connections cases studies from california oregon colorado and new york have been selected the case studies refer to two kinds of competitive mechanisms request for proposals rfp and auctions renewable auction mechanism a similar behaviour is observed across electric utilities in the way in which competitive auction mechanisms are being managed however the more sophisticated auction designs are observed in the rfps the study proposes a set of auction design elements with a focus on the uk context and examines the role of energy regulators in the design of well structured auction mechanisms we think that the experience cited in the four case studies can be replicated by distribution system operators dsos from europe however unbundling rules established in the european commission third energy package need to be taken into consideration

the merit order effect a detailed analysis of the price effect of renewable electricity generation on spot market prices in germany the german feed in support of electricity generation from renewable energy sources has led to high growth rates of the supported technologies critics state that the costs for consumers are too high an important aspect to be considered in the discussion is the price effect created by renewable electricity generation this paper seeks to analyse the impact of privileged renewable electricity generation on the electricity market in germany the central aspect to be analysed is the impact of renewable electricity generation on spot market prices the results generated by an agent based simulation platform indicate that the financial volume of the price reduction is considerable in the short run this gives rise to a distributional effect which creates savings for the demand side by reducing generator profits in the case of the year 2006 the volume of the merit order effect exceeds the volume of the net support payments for renewable electricity generation which have to be paid by consumers

energy contribution to latin american indcs analyzing sub regional trends with a times model central and south america and the caribbean countries share energy and climate features that are quite different from the rest of the world including a highly renewable energy mix and very high renewable energy potentials along with high deforestation and degradation rates which call for regional answers to regional issues this paper assesses the impact of national contributions to the united nations framework convention on climate change using an energy prospective model from the markal times family this approach enables a bottom up comparison between past pledges nationally appropriate mitigation actions and the nationally determined contributions ndcs agreed on at cop21 long term economic optimization leads to decarbonizing the power sector even in the absence of climate constraints stringent climate policies as modeled here achieve emission reductions of 40 below the current baseline by 2050 ndcs produce stronger emission reductions than namas at regional scale however the first contributor to emission reductions in absolute terms in latin america is the agriculture forestry and other land use afolu sector not energy

sufficient and necessary conditions for information to have social value in pure exchange this paper extends corrects and unifies earlier statements concerning the social value of public information as well as the no trading conditions in pure exchange sufficient and necessary conditions are provided for both the single period and two period cases in a postsignal trading model the social value of information is shown to be closely linked to the allocational efficiency of the market the degree of homogeneity of prior beliefs and of information structures the time additivity of preferences and the efficiency of endowments we conclude that the case in favor of public information is much stronger than previously suggested

is the answer blowin in the wind auctions an assessment of the italian support scheme abstract this article proposes a quantitative data based assessment of the onshore wind auctions conducted in italy from 2012 to 2016 our objective is to provide new insights in the ongoing debate on policy measures to promote renewable energy sources italian wind auction design is examined by firstly investigating its overall outcomes in terms of cost efficiency and policy effectiveness determinants affecting awarded tariffs are then empirically analysed further to explore the role of project related and firm specific factors as well as different auction design elements the extreme simplicity of the auction design undoubtedly has promoted competition encouraging many project developers to bid and reducing support both in static and dynamic terms results provide evidence that localisation factors did not constitute a competitive constraint from a policy perspective the administratively setting of ceiling prices is a major issue when wind resources are widely available and auctioned capacity is not sufficiently high while not limiting competition the effects of pre qualification criteria on the realisation rate deserve further analysis however doubts emerge on the policy effectiveness of the current support scheme which makes difficult to control the total amount of support provided thus likely causing stop and go cycles of financing and potentially favouring distorted bidding behaviour

disclosure decisions by firms and the competition for price efficiency this paper develops a model of the relationship between investment decisions by firms and the efficiency of the market prices of their securities it is shown that more efficient security prices can lead to more efficient investment decisions this provides firms with the incentive to increase price efficiency by voluntarily disclosing information about the firm disclosure decisions are studied it is shown that firms may expend more resources on disclosure than is socially optimal this is in contrast to the concern implicit in mandatory disclosure rules that firms will expend too few resources on disclosure this paper develops a model of the relationship between firms investment decisions and the efficiency of the market prices of their securities it is shown that more efficient security prices can lead to more efficient investment decisions this provides firms with the incentive to increase price efficiency by voluntarily disclosing information about the firm disclosure decisions are studied the costs of disclosure are twofold first there are costs of producing and disseminating the information included here are opportunity costs of firms employees auditing and legal expenses costs of printing and distribution and costs associated with the release of any proprietary information second there are traders costs of assimilating the information for instance while it is not very costly to obtain a firm s 8 k and 10 k once produced it is quite costly to understand the implications of their contents while the former costs have been recognized in the literature on disclosure the latter costs have not that is while traders are sometimes viewed as having access to some costly information the information contained in firms disclosures is typically taken to be costlessly observed by all see for instance diamond 1985 and dye 1987 1 taking traders costs of learning the information content of firms disclosures into account leads to new conclusions regarding incentives to expend resources on disclosure in particular it is shown that firms may spend more on disclosure than is socially optimal this overdisclosure results from firms competing for the attention of traders this is an interesting result given the public policy concern that firms on their own will spend less on disclosure than is socially optimal

reliability evaluation and adjustment of supply chain network design with demand fluctuations this study focuses on supply chain network design problems by considering economies of scale and demand fluctuations a reliability evaluation method is developed to evaluate the performance of plants under demand fluctuations in addition two mathematical programming models are developed to determine the optimal adjustment decisions regarding production reallocation among plants under different fluctuating demands the judgments to adjust or to do nothing are investigated by comparing the results if the adjustment is made or not made results show that making adjustments benefits the manufacturers by reducing total production cost and avoiding revenue loss which outweighs the extra costs especially for high value added products results also suggest that the manufacturer should ignore a short period abnormal state since the benefits to respond to it might not compensate the high allocation costs the results of this study provide a reference for the manufacturer in their decision making process of network planning with demand fluctuations when they have to cope with benefits and costs during abnormal states

production control in the face of storable raw material random supply and an outside market we study a periodic review production inventory control problem where both the supply of raw material and demand for the finished product are exogenous and random the raw material can be stored for future use can be purchased from or sold to an outside market we study both the lost sales and backlogging cases under both strict convex and linear raw material purchasing selling costs convexity of the purchasing selling cost implies that the more the firm purchases from or sells to the outside market the more expensive or less valuable the raw material becomes for all cases we find the partial characterizations for the optimal policies which all turn out to be very intuitively appealing in particular for each of the linear cost cases the optimal policy degenerates into a combination of two base stock policies one for the raw material inventory and the other for the finished product inventory

disagreements among shareholders over a firm s disclosure policy this paper examines the issue of voluntary disclosure of information by firms with heterogeneous shareholders it shows that in a rational expectations setting better iniformed shareholders prefer less disclosure than less well informed shareholders this is due to differences in the adverse risk sharing effect and the beneficial cost saving effect of disclosure among shareholders with differenit risk tolerances aild information acquisition cost functions the presence of individual liquidity shocks is shown to reduce shareholder disagreements regarding a firm s disclosure policy many firms voluntarily disclose information beyond l evels mandated by financial and accounting regulations still other firms seem to disclose as little information as they can the paper seeks to explain this difference prior studies dealing with disclosure typically are concerned with whether firms would disclose too little or too much information in the absence of mandatory rules 1 results differ across models depending on whether positive or negative externalities are considered for example in a model where disclosure only adversely affects shareholders risk sharing opportunities the optimal level of disclosure is zero and mandatory disclosure rules make all shareholders worse off 2 in contrast mandatory disclosure rules are viewed in this paper as a result of conflicts among firms shareholders with different risk attitudes and different access to inside information in general there is no optimal disclosure policy that is best for all shareholders 3 this paper is based on the model of diamond 1985 diamond considers two opposing effects a positive externality and a negative externality of disclosure to explain the existence of voluntary disclosure when acquiring private information is costly first disclosure adversely affects risk sharing

wind power reliability valuation in a hydro dominated power market the colombian case abstract the design of market mechanisms that remunerates the reliability provided by a generator in a power market is a task that aims to ensure the normal operation of the system for the case of a hydro dominated system when wind power is introduced and operated under the merit order effect it is possible to assess the effect of the displacement of hydro generation due to wind generation over the system s reliability in terms of firm energy taking this into account a model that valuates the firm energy provided by wind power in a hydro dominated system is proposed this model considers the effect of wind power over the system s reservoirs and the market price of electricity and valuates the firm energy as the net savings of the system related to the increase in the firm energy of the system when wind power is introduced the results show that wind power under merit order effect increases the firm energy of the system and decreases the market price of electricity being the net savings in comparison to the corresponding hydro only system the reliability income that should be perceived by the wind power generator

uncertainty in the theory of renewable resource markets the natural growth rate of most renewable resource stocks is in part stochastic this paper examines the implications of such ecological uncertainty for competitive equilibrium in a market with property rights we show that stochastic fluctuations add a risk premium to the rate of return required to keep a unit of stock in situ and we examine the effects of fluctuations on resource rent examples are used to show that extraction can increase decrease or be left unchanged as the variance of the fluctuations increases depending on the extent of market self correction regulatory implications are also discussed renewable resource economics has traditionally been concerned with the study of dynamically optimal harvesting policies given a deterministic function for the natural growth of the resource stock issues have included the existence and characteristics of steady state equilibria for the optimally managed resource the need for and design of regulatory policies to prevent over exploitation and conditions under which as a social optimum or otherwise the resource will be exploited to extinction 1 much of this work has been based on the assumption of a fixed and exogenous price for the harvested resource typically resulting in bang bang solutions for the harvesting policy however some recent papers make price endogenous and thereby describe how the extraction rate and the rate of return and asset value of the resource behave in a competitive market with property rights 2

regulatory design for res e support mechanisms learning curves market structure and burden sharing drawing from relevant experiences in power systems around the world this paper offers a review of existing policy support mechanisms for res e with a detailed analysis of their regulatory implications while recent studies provide an account of current res e support systems in this paper we focus on some of the impacts these mechanisms have on the overall energy market structure and its performance given the rising importance of res e in systems everywhere these impacts should no longer be overlooked

joint inventory replenishment and pricing control for systems with uncertain yield and demand we study the joint inventory replenishment and pricing problem for production systems with random demand and yield more specifically we analyze the following single item periodic review model demands in consecutive periods are independent random variables and their distributions are price sensitive the production yield is uncertain so that the quantity received from a replenishment is a random variable whose distribution depends on the production quantity stockouts are fully backlogged our problem is to characterize the optimal dynamic policy that simultaneously determines the production quantity and the price for each period to maximize the total discounted profit we show that the optimal replenishment policy is of a threshold type i e it is optimal to produce if and only if the starting inventory in a period is below a threshold value and that both the optimal production quantity and the optimal price in each period are decreasing in the starting inventory we further study the operational e

a periodic review production planning model with uncertain capacity and uncertain demand optimality of extended myopic policies increasing product complexity manufacturing environment complexity and an increased emphasis on product quality are all factors leading to uncertainties in production processes these uncertainties are in the form of unplanned machine maintenance varying production yields and rework among others in planning for production an adequate model must incorporate these uncertainties into the representation of the production process this paper treats the aggregate planning problem for a single product with random demand and random capacity in the single period problem random capacity does not affect the optimal policy but results in a unimodal nonconvex cost function in the multiple period and infinite horizon settings order up to policies that are dependent on the distribution of capacity are shown to be optimal in spite of a nonconvex cost in the infinite horizon setting an intuitive description of the situation leads to the notion of a class of extended myopic policies requiring the consideration o

real options approach to renewable energy investments in mongolia developing nations are seeking alternative energy for electricity and one attractive alternative is renewable energy this research analyzes changing investment environment for renewable energy with real options approach and explores its potential in developing economies through studying the case of mongolia under coal price uncertainty to evaluate comparative attractiveness of either continuing to use coal based infrastructures or switching to renewable energy we formulate social revenue functions for the two environments assuming that renewable energy has lower external costs and coal prices follow geometric brownian motion gbm or geometric mean reverting gmr processes we find the optimal trigger coal prices for switching technologies with some scenarios in electricity price and externality characterize when renewable energy investments become attractive in contrast to conventional wisdom we identify some situations where the value of having more decision opportunities does not exceed that of a now or never decision for switching technologies and welfare losses are incurred the optimal trigger prices are higher in gbm than in gmr and our result raises the possible risks for waiting to switch energy to avoid welfare losses in mongolia the government should increase electricity prices or switch to renewable energy earlier especially when people pay more for the removal of externalities

from planning to strategy in the electricity industry abstract as more utility markets are deregulated and competition is introduced there is an increasing need to understand how the planning methods used under monopoly have to change to take the new deregulated environment into account although this might seem relatively trivial it has been a major problem for a large number of utilities which have continued using the same planning approaches that they used when they were monopolies in this paper we first describe the environment which under monopoly conditions gave rise to the use of mainly operational research methods for planning we then argue that deregulation has changed the fundamental assumptions making the planning methods used under monopoly less useful after deregulation finally we review a number of methods that utilities should consider using when they formulate strategy in deregulated markets

diversification under supply uncertainty supply chain management is becoming an increasingly important issue especially when in most industries the cost of materials purchased comprises 40 60 of the total sales revenue despite the benefits cited for single sourcing in the popular literature there is enough evidence of industries having two three sources for most parts in this paper we address the operational issue of quantity allocation between two uncertain suppliers and its effects on the inventory policies of the buyer based on the type of delivery contract a buyer has with the suppliers we suggest three models for the supply process model i is a one delivery contract with all of the order quantity delivered either in the current period with probability or in the next period with probability 1 model ii is also a one delivery contract with a random fraction of the order quantity delivered in the current period the portion of the order quantity not delivered is cancelled model iii is similar to model ii with the remaining quantity delivered in the next period we derive the optimal ordering policies that minimize the total ordering holding and penalty costs with backlogging we show that the optimal ordering policy in period n for each of these models is as follows for x a n order nothing for vi n x a n use only one supplier and for x vi n order from both suppliers for the limiting case in the single period version of model i we derive conditions under which one would continue ordering from one or the other or both suppliers for model ii we give sufficient conditions for not using the second more expensive supplier when the demand and yield distributions have some special form for the single period version of models ii and iii with equal marginal ordering costs we show that the optimal order quantities follow a ratio rule when demand is exponential and yields are either normal or gamma distributed

a framework to evaluate security of supply in the electricity sector security of electricity supply soes has become a major concern for regulators and policymakers over the last decade however most work focusses either more generally on energy security or on a single fuel we develop a comprehensive but flexible framework to assess the soes for a single jurisdiction taking into the account the specificities of electricity this framework has two aims i provide a snapshot of the situation to understand current weaknesses and determine what actions are required ii capture the evolution over time to evaluate progress and identify potential problems before they materialise the framework based on an extensive literature review consists of twelve dimensions that are critical for soes we develop metrics that capture the state and evolution of each dimension this framework is intended to be a management information tool for all stakeholders aimed at organising data and structuring its analysis to enable monitoring the evolution of the soes while also functioning as an early warning system by flagging potential future problems

a market approach to long term security of supply the problem of ensuring that there is enough generation capacity to meet future demand has been an issue in market design since the beginning of the deregulation process although ideally the market itself should be enough to provide adequate investment incentives there are several factors that prevent this result from being achieved and some actual markets have already experienced problems related with a lack of generation capacity a regulatory framework to address this question is presented the procedure is based on an organized market where reliability contracts based on financial call options are auctioned so both their price and their allocation among the different plants are determined through competitive mechanisms this results in a stabilization of the income of the generators and provides a clear incentive for new generation investment with a minimum of regulatory intervention additionally the method represents a market compatible mechanism to hedge demand from the occurrence of high market prices

analysis of an inventory system under supply uncertainty in this paper we analyze a periodic review single item inventory model under supply uncertainty the objective is to minimize expected holding and backorder costs over a finite planning horizon under the supply constraints the uncertainty in supply is modeled using a three point probability mass function the supply is either completely available partially available or the supply is unavailable machine breakdowns shortages in the capacity of the supplier strikes etc are possible causes of uncertainty in supply we demonstrate various properties of the expected cost function and show the optimality of order up to type policies using a stochastic dynamic programming formulation under the assumption of a bernoulli type supply process in which the supply is either completely available or unavailable and when the demand is deterministic and dynamic we provide a newsboy like formula which explicitly characterizes the optimal order up to levels an algorithm is given that computes the optimal inventory levels over the planning horizon extensions and computational analysis are presented for the case where the partial supply availability has positive probability of occurrence

optimal replenishment and rework with multiple unreliable supply sources we study a production inventory system with multiple unreliable supply sources through inspection and rework the system can improve the quality of the units received from the supply sources there are two interleaved decisions the replenishment quantities from the sources and the inspection rework quantities among the units received we show the optimal solution to the replenishment decision can be efficiently derived from a greedy algorithm and inspection rework is optimally applied to a single source identified by the algorithm furthermore in the case of linear cost functions it is optimal to place orders from two supply sources i e dual sourcing the results extend to the infinite horizon case where an order up to policy is optimal the model also readily adapts to situations in which the supply imperfection takes the form of a reduced delivery quantity yield loss

an overview of incentive policies for the expansion of renewable energy generation in electricity power systems and the brazilian experience abstract energy production from renewable sources is already a reality in many countries and with that different strategies for incentivizing investments in renewable energy generation have been proposed and used over the years in this study long term policies that have been applied in several countries such as feed in tariffs shares with commercialization of certificates auctions and net metering are overviewed and discussed the main advantages and disadvantages of these incentive strategies are emphasized focusing on applications some of these strategies that have already been applied in brazil are analyzed in greater depth emphasizing the potentialities and fragilities of these mechanisms observed within the country even though it is a country that stands out in relation to other latin american countries regarding electricity generation from non hydro renewable sources brazil still faces barriers that prevent a utilization compatible with its potential moreover the trend for renewable sources such as wind and solar power is to represent an energy capacity reserve to cover hydrological risks and also to contribute to a distributed generation spread through electricity distribution networks

the environmental paradox in generation how south america is gradually becoming more dependent on thermal generation there has been an increasing focus on global warming emission of green house gases ghg and the problems this might create in this article we review the trend in sustainable and renewable electricity generation in south america where the generation portfolio increasingly depends on thermal generation in particular gas south america is a region that has relatively low emissions but the current development is not desirable in environmental terms we analyze the underlying reasons for this development which is related to security of supply deregulation and the cost of renewable energy we review and discuss the policies to promote renewables in the region we analyze the potential advantages and drawbacks of different types of market interventions such as direct subsidies that create potentially strong market distortions more sophisticated market interventions that might be less intrusive but not necessarily as effective as e g firm energy markets we also review market based solutions such as the clean market mechanism and its potential and the use of renewable electricity in non interconnected zones which might be one of the most economically attractive applications of renewables however without a stronger and more aggressive intervention from the governments in the region it is unlikely that the increase in thermal generation can be stopped

incentives for renewable energy in reformed latin american electricity markets the colombian case abstract given the importance of renewable energy sources for reducing the threat of global climatic change without compromising economic development this paper explores regulatory alternatives that may facilitate the introduction of renewable energy in the colombian electricity market the analysis is based on a simulation model of the electricity market that represents the behaviour of the agents involved and their decision to invest according to proposed incentives the possible expansion of renewable energy depending on different incentives is examined this research is carried out in the latin american context and accordingly we present the exploitation potential of renewable sources for electricity generation in the region this paper shows how restructuring electricity markets such as the colombian and others in latin america may be an efficient means to promote the use of renewable energy

dynamic capacity expansion for a service firm with capacity deterioration and supply uncertainty motivated by the challenges faced by the telecom industry during the past decade in this paper we study a dynamic capacity expansion problem for service firms there is a random demand for the firm s capacity in each period the demand in excess of the capacity is lost and revenue is generated for the fulfilled demand at the beginning of each period the firm might increase its capacity through purchasing equipment for immediate delivery which is constrained by a random supply limit or it might sign a future contract for equipment delivery in the following period we assume that the firm s capacity might partially become obsolete due to natural deterioration or technology innovation we aim at characterizing optimal capacity expansion strategies and comparing the profit functions as well as the optimal control policies of different options specifically we show that the optimal capacity expansion policy for the current period is determined by a base stock policy compared with the case where no future contracts are available the optimal control parameters of capacity expansion are always smaller we further show that when the obsolescence rate is deterministic the optimal policy for capacity expansion through future contracts is also a base stock type the results are extended to the cases with stochastically dependent capacity supply limits and stochastically dependent demand processes which establish the robustness of the optimal policy in various market conditions

coordinating inventory control and pricing strategies under batch ordering in this paper we investigate joint pricing and inventory control problems in a finite horizon single product periodic review setting with certain uncertain supply capacities the demands in different periods are random variables whose distributions depend on the posted price exhibiting the additive form the order quantity in each period is required to be of integral multiples of a given specific batch size denoted by q inventory replenishment incurs a linear ordering cost referred to as the cost rate function the sum of holding and backorder costs can either be convex or quasi convex the objective is to determine a joint ordering and pricing decision that can maximize the total expected profit over the planning horizon we first consider the case in which the cost rate function is convex and show that the modifiedr q list price policy is optimal for the system with certain and limited capacities a special case of which is the r q list price policy when capacities become unlimited as supply capacities become random the optimal policy follows a new structure wherein the optimal order up to level and posted price must be coordinated to make the optimal safety stock level follow the r q policy we further consider the case of a quasi convex cost rate function which may arise when a service level constraint is used as a surrogate for the shortage cost we demonstrate that the r q list price policy is optimal for the system without supply capacity constraints in addition extensions to several other models are discussed the enabling technique is based on the notion of q jump convexity and its variants

effects of regulatory reforms in the electricity supply industry on electricity prices in developing countries electric power sector reforms in the electricity supply industry have had an impact on industrial and household prices in developing countries in latin america the former soviet union and eastern europe using original panel data for 83 countries during the period from 1985 to 2002 we examine how each policy instrument of the reform measures influenced electricity prices for countries in the above regions we found that variables such as entry of independent power producers ipp unbundling of generation and transmission establishment of a regulatory agency and the introduction of a wholesale spot market have had a variety of impacts on electricity prices some of which were not always consistent with expected results the research findings suggest that neither unbundling nor introduction of a wholesale pool market on their own necessarily reduces the electric power price in fact contrary to expectations there was a tendency for the price to rise however coexistent with an independent regulator unbundling may work to reduce electricity prices privatization and the introduction of foreign ipp and retail competition lower electricity prices in some regions but not all

rural electrification under liberal reforms the case of peru abstract liberal reform programmes in developing countries were not designed with the need to extend electricity supplies to rural areas this paper focuses on the peruvian experience examining the impact of electricity reform policies on the characteristics of rural electrification in rural areas electrification levels have traditionally been the lowest in the country making them less or non profitable for private firms only in 2002 did the government introduce a specific rural electrification law which was intended to promote electrification within the context of a liberalised market this paper draws upon an analysis of both this piece of legislation and stakeholder interviews indicating that there exists a need to look further into the evolving relationship between the private and public sectors and how it affects the rural poor this study forms part of the resurl international research project on renewable energy for sustainable rural livelihoods in developing countries funded by the uk government s department for international development dfid

periodic review production models with variable capacity random yield and uncertain demand we investigate a production planning problem in a periodic review environment with variable production capacity random yields and uncertain demand the implications of random yields and variable capacity for lot sizing previously have been explored separately but not jointly many production environments are likely to be subject to both types of uncertainties to minimize the total discounted expected costs production holding and shortage costs we formulate the problem as a stochastic dynamic program for the finite horizon problem we prove that the objective function is quasi convex and that the structure of the optimal policy is characterized by a single critical point for the initial stock level at each period that is if the initial stock is greater than this critical point the optimal planned production is zero otherwise it is greater than zero expressions for solving the critical point and the optimal planned production are obtained we further show that the solution for the finite horizon problem converges to that of the infinite horizon problem

random yield supply chain with a yield dependent secondary market abstract this paper considers a simple supply chain with one supplier and one retailer where the supplier s production is subject to random yield and the retailer faces uncertain demand there exists a secondary market for acquiring or disposing products by the supplier we study both the centralized and decentralized systems in the decentralized system a no risk sharing contract and a risk sharing minimum commitment contract are analyzed the supply chain with the risk sharing contract is further analyzed with a constant secondary market price and a yield dependent secondary market price we present both the supplier s and the retailer s optimal strategies and provide insights for managers when making decisions under random yield risk and demand uncertainty we find that the secondary market generally has a positive impact on supply chain performance and the actual effect of random yield risk on the supply chain performance depends on cost parameters and supply chain contract settings under certain conditions reducing yield randomness may weaken the double marginalization effect and improve the chain performance from the numerical study we also show that there exists an optimal commitment level for the supply chain

the structure of periodic review policies in the presence of random yield this work provides a comprehensive analysis of a general periodic review production inventory model with random variable yield existence of an order point whose value does not depend on yield being random is proved in the single period case without specifying the yield model and using a very general cost structure when yield is a random multiple of lot size the nonorder up to optimal policy is characterized for a finite horizon model the finite horizon value functions are shown to converge to the solution of an infinite horizon functional equation and the infinite horizon order point is shown to be no smaller than when yield is certain

a single period stocking and pricing problem involving stochastic emergency supply abstract we develop a model for determining jointly optimal price and production policy of products with short life cycles subject to partially uncertain supply capacity within the price setting newsvendor framework we consider that demand in excess of the stocking quantity can be met by an emergency order due to the randomness of emergency supply capacity it may not always be possible to satisfy the demand completely assuming that all customers are charged the same price we explore the optimal sourcing and pricing decisions in the commonly used additive and multiplicative demand scenarios the first order conditions imply that the optimal price in the problem with random emergency supply is less than the optimal price associated with the deterministic demand problem when demand uncertainty is additive and it is greater than the optimal price associated with the deterministic demand problem when demand uncertainty is multiplicative we also find that the same type of comparative static applies in the multiplicative uncertainty case when there exists a dual source emergency system consisting of a perfectly reliable supplier and a second supplier with a stochastic capacity

as a renewable energy hydropower for sustainable development in turkey the most important renewable sources are hydropower biomass geothermal solar and wind turkey s geographical location has several advantages for extensive use of most of these renewable energy sources in recently electricity has demand increased significantly it is the fastest growing end use of energy therefore technical economic and environmental benefits of hydroelectric power make it an important contributor to the future world energy mix in the world particularly in the developing countries renewable energy resources appear to be one of the most efficient and effective solutions for sustainable energy development in turkey turkey s geographical location has several advantages for extensive use of most of the renewable energy sources this paper deals with policies to meet increasing energy and electricity demand for sustainable energy development in turkey turkey has a total gross hydropower potential of 433 gwh year but only 125 gwh year of the total hydroelectric potential of turkey can be economically used

modeling long term dynamics of electricity markets in the last decade many countries have restructured their electricity industries by introducing competition in their power generation sectors although some restructuring has been regarded as successful the short experience accumulated with liberalized power markets does not allow making any founded assertion about their long term behavior long term prices and long term supply reliability are now center of interest this concerns firms considering investments in generation capacity and regulatory authorities interested in assuring the long term supply adequacy and the stability of power markets in order to gain significant insight into the long term behavior of liberalized power markets in this paper a simulation model based on system dynamics is proposed and the underlying mathematical formulations extensively discussed unlike classical market models based on the assumption that market outcomes replicate the results of a centrally made optimization the approach presented here focuses on replicating the system structure of power markets and the logic of relationships among system components in order to derive its dynamical response the simulations suggest that there might be serious problems to adjust early enough the generation capacity necessary to maintain stable reserve margins and consequently stable long term price levels because of feedback loops embedded in the structure of power markets and the existence of some time lags the long term market development might exhibit a quite volatile behavior by varying some exogenous inputs a sensitivity analysis is carried out to assess the influence of these factors on the long run market dynamics

the impact of sustainable construction and knowledge management on sustainability goals a review of the venezuelan renewable energy sector the recognition of the relevance of energy especially of the renewable energies generated by the sun water wind tides modern biomass or thermal is growing significantly in the global society based on the possibility it has to improve societies quality of life to support poverty reduction and sustainable development renewable energy and mainly the energy generated by large hydropower generation projects that supply most of the renewable energy consumed by developing countries requires many technical legal financial and social complex processes sustained by innovations and valuable knowledge besides these efforts renewable energy requires a solid infrastructure to generate and distribute the energy resources needed to solve the basic needs of society this demands a proper construction performance to deliver the energy projects planned according to specifications and respecting environmental and social concerns which implies the observance of sustainable construction guidelines but construction projects are complex and demanding and frequently face time and cost overruns that may cause negative impacts on the initial planning and thus on society the renewable energy issue and the large renewable energy power generation and distribution projects are particularly significant for developing countries and for latin america in particular as this region concentrates an important hydropower potential and installed capacity using as references the performance of venezuelan large hydropower generation projects and the guri dam construction this research evaluates the tight relationship existing between sustainable construction and knowledge management and their impact to achieve sustainability goals the knowledge management processes are proposed as a basic strategy to allow learning from successes and failures obtained in previous projects and transform the enhancement opportunites into actions to improve the performance of the renewable energy power generation and distribution projects

establishing the role that wind generation may have in future generation portfolios assessing the correct future mix in generation portfolios has become more difficult given the introduction of emission trading schemes the recent fuel price rises and the increasing competitiveness of wind energy this paper combines analysis of generation economics load and wind generation characteristics generation adequacy and plant utilization to gain insight into the role of wind generation in desirable generation portfolios the unique characteristics of wind generation are accounted for in the analysis and sensitivity analysis is carried out with respect to discount rates carbon taxes and various fuel price scenarios results show that for a large range of future scenarios wind generation has a significant role to play in future generation portfolios in ireland mean variance portfolio theory is applied to examine the benefits of portfolio diversification in terms of avoiding exposure to volatile fuel prices analysis shows that wind generation has a further role to play in generation portfolios in this respect

the use of mathematical models in financial accounting well over a year ago it was proposed that i write a survey paper for this conference which discussed the role of mathematical models in financial accounting the difficulty with this assignment is that mathematical models have been used to address a wide variety of issues in financial accounting and a paper which touched on all of them would probably be unable to examine any single one in depth therefore i have chosen in financial accounting three popular mathematical modeling themes and have interpreted these themes in the context of a competitive equilibrium market model to lend greater cohesiveness to the discussion i refer to the three topics chosen as 1 assessing the consequences of public disclosure 2 formalizing the notion that markets are efficient with respect to information and 3 understanding the effect of increased public disclosure on private incentives to acquire information other areas in financial accounting which use mathematical models but are not discussed here include income measurement valuation models i e models which map accounting variables or other information into equi

cost effectiveness as energy policy mechanisms the paradox of technology neutral and technology specific policies in the short and long term when choosing policy mechanisms to design and deploy energy policies policymakers typically seek cost effective ones linking cost effectiveness to the lowest cost of support for res e generation and or consumer costs the objectives of this paper are to analyze the cost effectiveness of renewable portfolio standards rps feed in tariffs fit and auctions in the short and long term considering both technology neutral and technology specific approaches results show that rps and auctions are more cost effective than feed in tariffs fit in the short term if cost effectiveness is defined as minimizing consumer costs also if one or more emerging technologies with higher levelized life cycle costs lcc low cumulative production and high experience elasticity are considered in the pool of res e policy design a technology neutral approach in the short term could lock out these emerging technologies avoiding a long term lcc reduction in this case a technology specific policy used in the short term would reflect lower total generation policy costs in the long term if compared with a technology neutral policy in both short and long term this paper calls this phenomenon the paradox of technology neutral and technology specific policies in the long term considering the results this paper suggests a mix of technology neutral and technology specific policies using rps or auction mechanisms to promote res e

joint pricing and inventory replenishment decisions with returns and expediting abstract we study a single item periodic review model for the joint pricing and inventory replenishment problem with returns and expediting demand in consecutive periods are independent random variables and their distributions are price sensitive at the end of each period after the demand is realized a buyer can return excess stocks to a supplier or if there are stockouts the buyer can place an expediting order at the supplier to reduce the amount of shortage unfilled demands are fully backlogged we characterize the optimal dynamic policy that determines the pricing inventory replenishment and adjustment decisions in each period so that the total expected discounted profit is maximized for a very general stochastic demand function we can show that the optimal replenishment policy is a modified base stock policy the optimal pricing policy is a modified base stock list price policy and the optimal policy for inventory adjustment follows a dual threshold policy we further study the operational effect of returns and expediting analytical and numerical results demonstrate that returns and expediting lead to a significant profit increase in a number of situations including limited supply capacity sufficient flexibility of the expediting order high demand uncertainty and a price sensitive market

toward a theory of financial accounting welfare and public information in this paper we employ the concepts of neoclassical welfare economics to consider the role of publicly available information in various market configurations modeling pure exchange economies the need for such a study arises for several reasons first while the existing process of producing and disseminating accounting information may with some oversimplification be described as generating publicly available information there has been no systematic study of the effects of such a process on either the allocational efficiency of a market or on the broader welfare implications of such information for the participants transacting in such a market second the existing literature fails at least to some extent to capture the flavor or spirit of the role of public information in a market setting at first glance it might appear that information would have no social benefit in a pure exchange economy since it does not increase the aggregate supply of consumptive goods across states and dates as will be demonstrated this impression is not justified as a general conclusion the important dimension of information is that it affects perceived risks

gauging the future competitiveness of renewable energy in colombia this article aims to assess the likely competitiveness of different forms of renewable energy in colombia over the next 25 years to this end it compares the likely power production cost for a set of renewable energy sources and compares them to the likely long run cost of traditional energy costs from global and local externalities through the use of traditional energy sources are also factored into the analysis the key conclusion of the article is that while solar pv will likely remain uncompetitive under any future cost scenario cost paths for small hydro modern biomass or geothermal are already close enough to being competitive so that appropriate government intervention may make the decisive difference in making these technologies competitive with conventional energy technologies

adaptations of renewable energy policies to unstable macroeconomic situations case study wind power in brazil despite the massive cost reduction in the last decade wind power generation is generally still more expensive than conventional energy sources which benefit from the exclusion of externality costs in the price structure support policies for renewable energies guarantee the economic viability of this type of electrical power generation in many european countries in latin america brazil has become the pioneer state for renewable energy with the implementation of the proinfa programme that supports among other sources wind power development of 1100 mw this article presents an overview of the differences between the german and brazilian wind power promotion policies with a special focus on how proinfa can be adapted to the unstable macroeconomic situation of brazil the document specifically examines the adaptation of wind power promotion policies to large inflation and interest rates in brazil

asymmetric impacts of international energy shocks on macroeconomic activities while limited by its scarcity of natural resources the impacts of energy price changes on taiwan s economic activities have been an important issue for social public and government authorities this study applies the multivariate threshold model to investigate the effects of various international energy price shocks on taiwan s macroeconomic activity by separating energy price changes into the so called decrease and increase regimes we can realize different impacts of energy price changes and their shocks on economic output the results confirm that there is an asymmetric threshold effect for the energy output nexus the optimal threshold levels are exactly where the oil price change is at 2 48 the natural gas price change is at 0 66 and the coal price change is at 0 25 the impulse response analysis suggests that oil price and natural gas shocks have a delayed negative impact on macroeconomic activities 2012 published by elsevier ltd

a brazilian perspective of power systems integration using osemosys samba south america model base and the bargaining power of neighbouring countries a cooperative games approach abstract this paper intends to contribute to a better understanding of both advantages and drawbacks of power systems interconnection processes between brazil and its south american neighbours based on data available in national and international reports three scenarios for the power supply sector expansion were modelled in osemosys the brazilian perspective of power integration considers funding strategic hydro projects in argentina bolivia guyana and peru an alternative to the power integration process considers higher penetration of distributed photovoltaics and biogas power plants as well as lower hydro capacity expansion in brazil features related to costs carbon emissions hydro reservoirs technological performance electricity demand population growth time zones and reserve margin were considered the comparison of different scenarios provides insights regarding the contribution of renewable energy generation and sheds light on cross border trade perspectives between brazil and other countries in south america using a cooperative games approach the bargaining power of each country player was calculated by applying the shapley value concept argentina brazil paraguay peru and guyana have the largest bargaining power either as exporter or importer

optimality of myopic policies for dynamic lot sizing problems in serial production lines with random yields and autoregressive demand we study lot size policies in a serial multistage manufacturing inventory system with two key generalizations namely 1 random yields at each production stage and 2 an autoregressive demand process previous research shows that the optimal policies in models with random yields even in models with a single installation lack the familiar order up to structure and are not myopic thus dynamic programming algorithms are needed to compute optimal policies and one encounters the curse of dimensionality this is exacerbated here by the need to expand the size and dimension of the state space to accommodate the autoregressive demand feature nevertheless although our model is more complex we prove that there is an optimal policy with the order up to feature and more importantly that the optimal policy is myopic this avoids the computational burden of dynamic programming our results depend on two assumptions concerning the stochastic yield namely that the expected yield at a work station is proportional to the lot size and the distribution of the deviation of the yield from its mean does not depend on the lot size we introduce the concept of echelon like variables a generalization of clark and scarf s classical concept of echelon variables to derive the structure of optimal policies furthermore we show that the same kind of policy is optimal for several criteria infinite horizon discounted cost infinite horizon long run average cost and finite horizon discounted cost with the appropriate choice of the salvage value function

revisiting support policies for res e adulthood towards market compatible schemes abstract the past two decades of growth in renewable energy sources of electricity res e have been largely driven by out of market support policies these schemes were designed to drive deployment on the basis of specific subsidies sustained in time to allow for the larger costs as well as to limit investor risk while these policies have proven to be effective the way they have been designed to date has led to costly market distortions that are becoming more difficult to ignore as penetrations reach unpreceded levels in the context of this growing concern we provide a critical analysis of the design elements of res e support schemes focusing on how they affect this trade off between promoting and efficiently integrating res e the emphasis is on the structure of the incentive payment which in the end turns to be the cornerstone for an efficient integration we conclude that while needed a well designed and further developed capacity based support mechanism complemented with ex post compensations defined for reference benchmark plants such as the mechanism currently implemented in spain is an alternative with good properties if the major goal is truly market integration the approach is robust to future developments in technology cost performance and market penetration of res e

the effects of sfas 131 geographic segment disclosures by us multinational companies on the valuation of foreign earnings foreign operations are becoming increasingly important for us companies we investigate whether the market s valuation of foreign earnings is a function of the firm s geographic segment disclosures specifically we examine the effects of an increase in the number of geographic segments disclosed and the inclusion of earnings measures in geographic segment disclosures following the adoption of sfas 131 we find strong evidence that our proxies for increased disclosure are positively associated with the valuation of foreign earnings our results are robust to a number of sensitivity analyses taken together our results suggest that the pricing of foreign earnings is associated with important aspects of the firm s information environment

evaluation of methodologies for remunerating wind power s reliability in colombia abstract colombia strives to have enough firm capacity available to meet unexpected power shortages and peak demand this is clear from mechanisms currently in place that provide monetary incentives in the order of nearly us 14 mw h to power producers that can guarantee electricity provision during scarcity periods yet wind power in colombia is not able to currently guarantee firm power because an accepted methodology to calculate its potential firm capacity does not exist in this paper we argue that developing such methodology would provide an incentive to potential investors to enter into this low carbon technology this paper analyzes three methodologies currently used in energy markets around the world to calculate firm wind energy capacity pjm nyiso and spain these methodologies are initially selected due to their ability to accommodate to the colombian energy regulations the objective of this work is to determine which of these methodologies makes most sense from an investor s perspective to ultimately shed light into developing a methodology to be used in colombia to this end the authors developed a methodology consisting on the elaboration of a wind model using the monte carlo simulation based on known wind behaviour statistics of a region with adequate wind potential in colombia the simulation gives back random generation data representing the resource s inherent variability and simulating the historical data required to evaluate the mentioned methodologies thus achieving the technology s theoretical generation data the document concludes that the evaluated methodologies are easy to implement and that these do not require historical data important for colombia where there is almost no historical wind power data it is also found that the spanish methodology provides a higher capacity value and therefore a higher return to investors the financial assessment results show that it is crucial that these types of incentives exist to make viable wind projects in colombia at us 2000 installed kw with the absence of these incentives the project s npv would be negative before and after taxes additionally it is demonstrated that wind power projects would only be viable in colombia if the price of cers is at least us 20 co2e ton furthermore it is concluded that income tax exemptions are not enough to encourage wind power development in colombia

environmental safety stock the impacts of regulatory and voluntary control policies on production planning inventory control and environmental performance abstract this paper analyzes the impacts of different pollution control policies on a firm s decisions of production planning and inventory control based on a stochastic model with both demand and environmental uncertainties we derive the optimal policies of production planning and inventory control under both regulatory and voluntary pollution control approaches and investigate their operational and environmental effects we establish that the conventional wisdom which suggests that reduction of environmental waste at the end of a production process also decreases the stock and throughput levels of a production system is not necessarily true rather a regulatory environmental standard that limits the total amount of waste may induce the firm to raise its planned stock level which would lead to a higher expected amount of environmental wastes before the standard is enforced as well as environmental risks at other stages of the production process the additional planned stock level which is termed environmental safety stock can be reversed by using the voluntary control approach that provides the firm with the flexibility to occasionally exceed the environmental standard we also conduct numerical experiments to analyze the effects of different values of model parameters under different control approaches the analytical results provide new insights to the impacts of a firm s production and inventory decisions on the natural environment as well as to the choices of pollution control approaches by decision makers in both the private and public sectors

dynamic replenishment production and pricing decisions in the face of supply disruption and random price sensitive demand abstract we study a joint decision problem for replenishment production pricing strategies in the face of both supply and demand uncertainties the supply of the raw material suffers from a potential supply disruption while the demand for the finished goods is price sensitive and random we assume that the raw material is storable and unfilled demands are fully backordered we characterize the optimal policies for raw material replenishment finished goods production and pricing we find that the optimal replenishment policy is an order up to type for a given finished goods stock level while it is a threshold type for a given raw material stock level for either a given finished goods stock level or a given raw material stock level the optimal production policy is a threshold type and the optimal pricing policy is a modified list price type respectively

information aggregation in a noisy rational expectations economy abstract this paper analyzes a general equilibrium model of a competitive security market in which traders possess independent pieces of information about the return of a risky asset each trader conditions his estimate of the return both on his own private source of information and price which in equilibrium serves as a noisy aggregator of the total information observed by all traders a closed form characterization of the rational expectations equilibrium is presented a counter example to the existence of fully revealing equilibrium is developed

impact of climate policy uncertainty on the adoption of electricity generating technologies this paper presents a real options model where multiple options are evaluated simultaneously so that the effect of the individual options on each other is accounted for we apply this model to the electricity sector where we analyze three typical technologies based on fossil fuel fossil fuel with carbon capture and renewable energy respectively in this way we can analyze the transition from co2 intensive to co2 neutral electricity production in the face of rising and uncertain co2 prices in addition such a modelling approach enables us to estimate precisely the expected value of perfect information i e the willingness of investors and producers to pay for information about the correct co2 price path as can be expected the expected value of information rises with increasing co2 price uncertainty in addition the larger the price uncertainty the larger are the cumulative co2 emissions over the coming century the reason for this is that the transition to less co2 intensive technologies is increasingly postponed with rising co2 price uncertainty by testing different price processes geometric brownian motion versus jump processes with different jump frequencies we can also make useful recommendations concerning the importance of policy predictability we find that it is better to have climate change policies that are stable over a certain length of time and change abruptly than less abrupt but more frequently changing policies less frequent fluctuations reduce the expected value of information and result in smaller cumulative co2 emissions