an analysis of the optimum renewable energy portfolio using the bottom up model focusing on the electricity generation sector in south korea abstract the deployment of renewable energy is considered as one of the important alternative solutions for reducing greenhouse gas emissions caused by electricity generation as one of the key measures for promoting the deployment of renewable energy the renewable portfolio standard rps which obligates power operators with a power equipment capacity of 500 mw or larger excluding renewable energy equipment to supply over a specific portion of their total electricity generation output in the form of renewable energy was enacted in south korea in 2012 however there are still many disputes concerning the appropriate renewable energy deployment goal and the optimum portfolio for each renewable energy source which enable to minimize the economic burden while achieving the deployment target therefore this paper intends to deduce the optimum portfolio up to 2050 based on explicit representation of renewable energy technologies and analyze the cost effect using the bottom up energy system analysis model of electricity generation sector in south korea the result indicates that the potential for a reduction of the cost of pv was the highest and that in the long term it would account for the highest portion of the renewable energy portfolio as it was the most cost competitive technology the additional cost for increasing the renewable deployment target 20 compared with the 3rd energy basic plan was predicted to be between 107 and 115 usd mw h therefore the renewable energy will be able to play a greater role in reducing ghg emission if the r d to reduce investment and operation cost of pv and wind power is conducted successfully

optimal allocation of energy sources for sustainable development in south korea focus on the electric power generation industry abstract national energy planning has become increasingly complex owing to a pressing need to incorporate sustainability considerations in this context we applied least cost and cost risk optimization models to allocate energy sources for sustainable development in the korean electric power generation industry the least cost model determined an electricity generation mix from 2012 to 2030 that incurs minimum generation cost to meet electricity demand the cost risk model determined electricity generation mixes in 2030 considering the risks associated with each energy source in order to lessen external risks in deriving these optimal electricity generation mixes we considered both conventional and renewable energy sources in conjunction with physical and policy constraints that realistically reflect korean circumstances moreover we accounted for co 2 and external costs within the electricity generation costs for each energy source for sustainable development in korea we conclude that a portion of the coal and gas in the electricity generation mix must be substituted with nuclear and renewable energy furthermore we found that least cost allocation is sub optimal from cost risk perspective and that it limits the adoption of renewables finally we also discuss the implications of decisions taken by the korean government regarding the electricity generation mix for next generation energy planning to achieve sustainability

real exchange rates and relative prices an empirical investigation abstract this paper uncovers a striking empirical regularity the consumer price of a good relative to a different good within a country tends to be much less variable than the price of that good relative to a similar good in another country this fact seems to hold for all goods except very simple homogeneous products models of real exchange rates are likely to have predictions regarding this relation so this fact may provide a useful gauge for discriminating among models

investment risks in power generation a comparison of fossil fuel and renewable energy dominated markets abstract due to their high capital intensity weather dependent renewable energies res such as solar and wind face considerable investment risks in power markets in addition their uncertain production volumes also affect the investment risks of other plant types through the impact on power prices and residual demand increasing res shares thus potentially increase overall investment risks in power markets which many analysts consider to be a potential problem against this background this paper compares investment risks of different technologies in markets with increasing shares of variable res it further analyses how generation mixes are affected by these investment risks if the risks are evaluated on a stand alone basis or in a plant portfolio context of a private firm for this purpose a stylized investment and dispatch model is used to conduct monte carlo simulations from which risk measures are derived the results show that capital intensive res face the highest stand alone risks since their profits are most affected by the power price risk however the results further indicate that the stand alone risks of variable res decrease with their share in the market because of a negative correlation of output and price risk in addition res have a risk benefit in firm plant portfolios in terms of constituting a hedge against losses of fossil fuel plants this positive portfolio effect however rapidly decreases and becomes negative with increasing res shares in the market

economics of pooling small local electricity prosumers lcoe self consumption abstract the arrival of small scale decentralized energy installations coincides with the emergence of so called prosumers entities households that are producer and consumer of energy in one this research focuses on an electricity prosumer model in the context of the uk market levelized cost of electricity lcoe for photovoltaic pv and wind energy will be modeled for six uk sites additionally self consumption levels for two different load profiles and technologies will be estimated per site the simulations are modeled with homer software and multiple inputs will be varied including natural resource equipment cost maintenance cost equipment life expectancy cost of capital project life and load profiles the modeled self consumption levels show significant differences and varied between 31 and 72 depending on load profile itself and re technologies mixes modeled the pooling of prosumers implied by lower load profile volatility proved to be beneficial to self consumption levels in the modeled scenarios up to 17 6 lcoe showed significant ranges depending on the input parameters and their combination 10 55 p kw h for pv and 2 19 p kw h for wind the combination of these factors is decisive for the final lcoe and the negative effects of less benign factors can be compensated by other parameters when compared to current electricity retail prices of around 15 p kw h around 97 of wind sites and around 4 of pv scenarios implied lcoe reached grid parity the self consumption levels and lcoe analysis indicate the viability of electricity prosumer models

business case uncertainty of power plants in future energy systems with wind power abstract the european power sector is transforming due to climate policies and an increased deployment of intermittent res the sector will require thermal power plants for the decades to come but their business cases are negatively affected by this transformation this study presents a novel tool to quantify the effect of policy price and project related uncertainties on power plant business cases this tool can support policymakers in stimulating necessary investments in new thermal generation capacity we find that these investments are currently unsound power plants recoup on average 12 to 59 of their initial investment future climate policy i e the co 2 price has a very strong impact on business cases affects the profitability by 5 40 points the impact of the deployment of wind power is average 2 8 point difference between 10 and 21 wind penetration variations in annual wind power production barely affect the profitability variation of 1 point to stimulate new investments policymakers should first decrease the uncertainty in business cases caused by policy durable climate policy is especially important also policies to increase the profits of thermal power plants should be carefully considered and implemented this combined approach will reduce the revenue gap that needs to be bridged by supportive policies

evaluation of the long term power generation mix the case study of south korea s energy policy abstract this paper presents a practical portfolio model for the long term power generation mix problem the proposed model optimizes the power generation mix by striking a trade off between the expected cost of power generation and its variability we use monte carlo simulation techniques to consider the uncertainty associated with future electricity demand fuel prices and their correlations and the capital costs of power plants unlike in the case of conventional power generation mix models we employ cvar conditional value at risk in designing variability to consider events that are rare but enormously expensive a comprehensive analysis on south korea s generation policy using the portfolio model shows that a large annual cost is additionally charged to substitute a portion of nuclear energy with other alternatives nonetheless if korea has to reduce its dependency on nuclear energy because of undermined social receptivity from the fukushima disaster it turns out that lng or coal could be a secure candidate from an economic perspective

tariffs real exchange rates and the trade balance in a two country world abstract an intertemporal model of a two country world in which optimizing agents consume three goods importables exportables and nontradables is developed to investigate a tariffs effects on real interest rates real exchange rates and the trade balance real interest rates and real exchange rates are shown to move asymmetrically across countries in response to a temporary tariff we also show that in contrast to the findings of two tradable good models a temporary tariff may actually worsen the trade balance of both deficit and surplus countries even when there are no cross country differences in tastes

an empirical evaluation of the macroeconomic effects of tarrifs abstract the macroeconomic effects of unilateral tariff changes are reviewed in a variety of theoretical models it is shown that there is no theoretical presumption about the effects of tariffs on output or the trade balance five different data sets are found to be consistent with the hypothesis that tariff changs have no significant effects on the real exchange rate the real trade balance and real output both foreign and domestic tariff rates do appear to have a negative effect on the gross volume of international trade jel f13 f40

foreign direct investment and domestic investment in the host country evidence from panel study this article examines the impact of inward foreign direct investment fdi on host countries domestic investment utilizing data from 50 countries over the period of 1970 to 2004 we find that inward fdi has a negative contemporaneous effect on domestic investment while the cumulative effect of fdi over time tends to be positive in addition we separately study fdi in developed countries dcs and less developed countries ldcs the effect of contemporaneous fdi on domestic investment is negative in dcs and the cumulative effect of fdi is neutral strong evidence suggests that the contemporaneous effect of fdi on domestic investment is neutral in ldcs while the cumulative effect of fdi is positive

is foreign direct investment beneficial for mexico an empirical analysis 1960 2001 summary this paper examines the impact of foreign direct investment fdi on labor productivity growth in mexico using cointegration analysis a dynamic labor productivity function for the 1960 2001 period is estimated that includes inter alia the impact of changes in the stock of private and foreign capital per worker the error correction model ecm estimates suggest that increases in both private lagged and foreign lagged investment per worker have a positive and economically significant effect on the rate of labor productivity growth however after taking into account the growing remittances of profits and dividends there is a marked decrease in the economic effect of foreign capital per worker on the rate of labor productivity growth the paper assesses the short term interactions of the relevant variables via impulse response functions irfs and variance decompositions vdcs based on a decomposition process that does not depend on the ordering of the variables

motives to adopt renewable electricity technologies evidence from sweden the diffusion of renewable electricity technologies rets has to speed up for countries to reach their often ambitious targets for renewable energy generation this requires a large number of actors including individuals companies and other organizations to adopt rets policies will most likely be needed to induce adoption but there is limited knowledge about what motivates ret adoption the purpose of this paper is to complement and expand the available empirical evidence regarding motives to adopt rets through a survey to over 600 ret adopters in sweden the main finding of the study is that there are many different motives to adopt rets and that ret adopters are a heterogeneous group with regard to motives although environmental concerns interest in the technology access to an re resource and prospects to generate economic revenues are important motives in general adopters differ with regard to how large importance they attach to the same motive and each adopter can also have several different motives to adopt there are also differences in motives between adopter categories especially independent power producers vs individuals and diversified companies and between rets especially wind power vs solar power this implies that a variety of policy instruments might be needed to induce further adoption of a variety of rets by a variety of adopter categories

analyzing korean consumers latent preferences for electricity generation sources with a hierarchical bayesian logit model in a discrete choice experiment generally consumers use electricity without considering the source the electricity was generated from since different energy sources exert varying effects on society it is necessary to analyze consumers latent preference for electricity generation sources the present study estimates korean consumers marginal utility and an appropriate generation mix is derived using the hierarchical bayesian logit model in a discrete choice experiment the results show that consumers consider the danger posed by the source of electricity as the most important factor among the effects of electricity generation sources additionally korean consumers wish to reduce the contribution of nuclear power from the existing 32 11 and increase that of renewable energy from the existing 4 32

price discrimination by u s and german exporters the insensitivity of the u s trade balance to the sharp depreciation of the dollar in the past three years has revived interest in the relationship between exchange rates and the trade balance a central issue in most analyses of the relation between the current account and the exchange rate concerns the price adjustment process the simple integrated competitive market model predicts that local currency prices should change in proportion to the nominal exchange rate for a country too small to influence world prices the relationship between local currency import prices and exchange rates has been referred to as the pass through relationship in the empirical literature in international economics if the proportional relationship between import prices and exchange rates holds pass through is said to be complete accounts of recent u s experience cite the failure of dollar prices of imported goods to rise in proportion to exchange rates i e incomplete pass through as an important factor in explaining the persistence of the trade deficit unfortunately observations on pass through alone provide limited insight into the behavior of markets since incomplete pass through is consistent with at least two fundamentally different paradigms one is the standard competitive model of trade in which the law of one price holds but exchange rate fluctuations are associated with large changes in import demand due to other factors for example if dollar appreciation is correlated with increases in world demand and industry marginal cost is increasing then pass through will be less than complete the other is an imperfectly competitive model in which exporters are capable of price discriminating across destination markets a phenomenon paul krugman 1987 has labeled pricing to market in this model incomplete pass through is typically associated with fluctuations in the markup of price over marginal cost on exports 2 these fluctuations in markups are believed to be countryspecific they do not reflect the behavior of prices to other export destinations both models are plausible explanations of recent u s experience unfortunately it is impossible to distinguish between these competing models using only information on import prices and exchange rates for a single country in order to distinguish between the competing models an empirical analysis of goods prices and exchange rates must be capable of measuring either marginal cost or the markup over marginal cost either of these tasks poses formidable empirical problems much of the empirical literature in industrial organization has been concerned with precisely these issues since markups are an important measure of the competitiveness of industries

new directions for stochastic open economy models the paper develops a simple stochastic new open economy macroeconomic model based on sticky nominal wages explicit solution of the wage setting problem under uncertainty allows one to analyze the effects of the monetary regime on welfare expected output and the expected terms of trade despite the potential interplay between imperfections due to sticky wages and monopoly the optimal monetary policy rule has a closed form solution to motivate our model we show that observed correlations between terms of trade and exchange rates are more consistent with our traditional assumptions about nominal rigidities than with a popular alternative based on local currency pricing 2000 elsevier science b v all rights reserved

aspects of the optimal management of exchange rates abstract this paper shows that the choice of the optimal exchange rate regime depends on the stochastic shocks affecting the economy the higher the variance of real shocks the larger the desirability of fixity of exchange rates the desirability of exchange rate flexibility increases the larger are the variances of the shocks to the demand for money to the supply of money to foreign prices and to purchasing power parities when the economy produces traded and non traded goods the desirability of exchange rate flexibility diminishes the higher is the relative share of non traded goods and the lower are the elasticities of demand and supply of the two goods

political governance civil liberties and human capital evaluating their effect on foreign direct investment in emerging and developing economies we study the influence of a country s political governance on its attractiveness to foreign direct investors we argue that democracy is not a unidimensional concept and that the effect of host country political governance on incoming foreign direct investment fdi differs depending on whether fdi originates from a democratic or an autocratic country we also hypothesize that the effect of civil liberties depends on the motivations of investing multinational enterprises mnes and that human capital moderates this relationship we test our hypotheses on a sample of 35 000 investments in emerging and developing countries between 2003 and 2013

economic reforms fdi and economic growth in india a sector level analysis summary booming foreign direct investment fdi in post reform india is widely believed to promote economic growth we assess this proposition by subjecting industry specific fdi and output data to granger causality tests within a panel cointegration framework it turns out that the growth effects of fdi vary widely across sectors fdi stocks and output are mutually reinforcing in the manufacturing sector whereas any causal relationship is absent in the primary sector most strikingly we find only transitory effects of fdi on output in the services sector however fdi in the services sector appears to have promoted growth in the manufacturing sector through cross sector spillovers

real disturbances the current account and the exchange rate the case of a tariff abstract this paper examines the effects of an unanticipated tariff on the current account and the exchange rate it is demonstrated that if nontraded goods and importables are substitutes complements in excess demand the imposition of a tariff will may lead to a current account surplus deficit and an appreciation depreciation of the domestic currency the model can be extended to analyze the effects of other real disturbances on the current account and the exchange rate

foreign direct investment and endogenous growth in vietnam foregin direct investment s fdi s contribution to growth has been a controversial topic in economic literature and appears to be country specific in this article we use time varying coefficients in an augmented production function and let fdi indirectly affect gross domestic product growth through labour productivity this approach creates built in heteroskedasticity so the feasible generalized least square estimation is employed the results show that fdi has significant and positive effect on labour productivity and economic growth in vietnam but the effect is not equally distributed among economic sectors

the european low carbon mix for 2030 the role of renewable energy sources in an environmentally and socially efficient approach abstract the european union s commitment to increase the presence of renewable energy sources in its portfolio has resulted in better levels of security of supply competitiveness and environmental sustainability this proposed work reviews european legislation regarding the promotion of renewable energy sources as well as the bibliography that applies portfolio theory methodology to energy policy this double revision gives rise to the question whether the share limits of renewable energy technologies anticipated for the european power mix in 2020 and 2030 are actually efficient the optimization model corrects for the attractiveness of renewable energy sources as opposed to conventional sources in terms of costs risks and pollutant gas emissions this model successfully and explicitly identifies the positive effect on the environment that is represented by the inclusion of renewable energy sources in the portfolio the goal is to minimize the cost and risk that society must bear to produce electricity in addition to compliance with european pollutant gas co2 so2 nox and pm objectives the results for 2020 indicate that the eu would not be able to reach its emissions reduction goals with the anticipated shares of renewable energy sources in 2030 achieving a lower emissions portfolio would not mean taking on greater costs although it would be necessary to assume a greater level of risk the anticipated shares of renewable energy sources 5 and fossil fuel technologies 15 would be overdimensioned in the forecasts analyzed in terms of technologies both nuclear and wind energy stand out both with shares above 20 on the contrary biomass and solar photovoltaic energies would be unnecessary in order to reach efficiency in any case one thing is clear the eu would be the master of its energy future if it prioritizes the importance of renewable energy sources in its efficient portfolio

energy security and improvements in the function of diversity indices taiwan energy supply structure case study abstract facing the risk and uncertainty inherent in social and economic development many countries have adopted an energy supply diversification strategy in their energy security policy to control the energy import risk and cost to ensure that sufficient energy can be obtained at an affordable price level diversification helps the energy system respond to external changes and shocks diversification can also lessen the vulnerability of a single energy source to supply shocks and the market power of various energy supply sources this study develops the diversity reliability index and co vary diversity reliability index based on the hirschman herfindahl and shannon wiener indices investigates the contribution of different energy sources to the energy system and analyzes the covariance between various energies and their impacts on energy security to determine the impact of energy diversity in reducing the risk of energy supply shortages and cost fluctuations

investments and cleaner energy production a portfolio analysis in the italian electricity market abstract the recent climate change global warming environmental disasters and the economic crisis are only the first signs of the failure of an economic system that for too long shows an uncontrolled utilization of the planet wealth the italian electricity market which is strongly dependent on hydrocarbons only in recent years has seen a first attempt to change towards renewable resources for electricity production aimed at self consumption and for feeding into the grid this paper presents an economic analysis whose purpose is to evaluate the profitability of investments in renewable technologies for the production of electricity each renewable source has its own profitability dependent on a number of factors and subject to market fluctuations cost and frequent changes in the incentive policies applying portfolio theory is possible to select the right mix of renewable energy sources and simulate its evolution moreover the presented analysis can be useful for energy planners to select future green scenarios finalized to the reduction of emissions and energy imports through the increasing use of renewable energy

the growth and welfare consequences of differential tariffs this paper analyzes the impact of differential tariffs on consumption and investment in a specific factors model of a small open economy in which capital is accumulated over time particular attention is devoted to the welfare aspects highlighting the cost of the intertemporal distortions produced by protective trade policies several specific welfare propositions are obtained first tariff protection is shown to create short run benefits but long run costs in welfare second the second best policy for the two tariffs is characterized finally several propositions summarizing the implications of our analysis for tariff reform are derived

trade costs and the open macroeconomy trade costs are known to be a major obstacle to international economic integration following the approach of new open economy macroeconomics this paper explores the effects of international trade costs in a micro founded general equilibrium model that also allows for pricing to market trade costs are shown to create an endogenous home bias in consumption and reduce cross country consumption correlations in addition trade costs magnify exchange rate volatility in response to monetary shocks and typically turn a monetary expansion into a beggar thy neighbor policy it is striking that trade costs generally lead to these results both under producer and local currency pricing

renewable energy diffusion in asia can it happen without government support the dramatically increasing population of asia necessitates equally as dramatic increase in energy supply to meet demand rapidly increasing energy demand is a major concern for asian countries because the increase in demand is being met through the increased use of fossil fuel supply largely domestic coal and imported fuel renewable energy supply presents a lower emission pathway that could be a viable option for steering off the higher emissions path however several market economic institutional technical and socio cultural barriers hinder countries in moving from high to low emission pathway following a discussion on the rising demand for energy in asia and the prospects of partly satisfying it with renewable energy we outline the reasons for government support to tackle the barriers for widespread diffusion of grid based renewable energy additionally we also discuss workable models for strategic government intervention to support diffusion of grid based renewable energy in asia

portfolio applications in electricity markets review private investor and manager perspective trends abstract the private sector plays a major role in the expansion and operation of power systems in most countries especially those running liberalized electricity markets policymakers have the task of inducing private agents through their regulatory designs to make decisions that point toward social welfare maximization conversely it is a task of private agents to protect themselves against the risks of the sector including regulatory risks international fuel price uncertainty climate change policies natural resource availability electricity demand uncertainty co2 clearance prices etc instead of hiding all of these risks within the total project costs and losing competitiveness private agents can use diversification as a strategy to deal with them this paper presents a review of the main applications voids and challenges of portfolio optimization for two key agents of the private sector investors and managers the problem of the investor is to design a technology portfolio to invest in that maximizes its expected returns and limits risks while the manager has to design a portfolio of financial physical instruments long term contracts futures etc to sell buy electricity and hedge against price risks we have found two fundamental issues in the literature the first and most important is excessive confidence in historical data and statistical analysis for predicting future price behavior for a changing future in detriment of more structural analysis structural analysis can include particularities of modern power systems such as future transmission changes congestion operational constraints ramps new entrants new technologies and new demand grow patterns that cannot be taken into account by simply analyzing price historical values the second is the omission of renewable complementarities which is a proven characteristic of dispersed renewable plants that may have important risk mitigation effects although it has largely been ignored in portfolio analysis due to insufficient data modeling limitations and computational complexity

tariffs interest rates and the trade balance in the world economy abstract a two commodity intertemporal framework is used to show that in contrast to the conventional wisdom both permanent and temporary tariffs may worsen the trade balance of a large country for a temporary tariff the key condition for this result is a low intertemporal elasticity of substitution in consumption when a temporary tariff worsens the trade balance the world real interest rate must fall if the tariff imposing country is running a deficit and rise if it is running a surplus temporary tariffs can only worsen the trade balance of a surplus country when international differences in tastes are important

tariffs and exchange rate dynamics redux abstract this paper builds a two country intertemporal macroeconomic model similar to one developed recently by obstfeld and rogoff imperfectly competitive producer consumers maximize an intertemporal utility function with consumption real money balances and output as arguments we use the framework to examine both the short run and steady state effects of the imposition of a tariff in one of the countries this results in a fall in the tariff imposer s output in both the steady state and in the short run a small tariff may make a country worse off contrary to the usual result under perfect competition spillover effects are also considered

consumption and real exchange rates in dynamic economies with non traded goods abstract we examine the possibility that non traded goods may account for several striking features of international macroeconomic data large persistent deviations from purchasing power parity small correlations of aggregate consumption fluctuations across countries and substantial international real interest rate differentials a dynamic exchange economy is used to show that non traded goods in principle can account for each of these phenomena in the theory there is a close relation between fluctuations in consumption ratios and those in bilateral real exchange rates but we find little evidence for this relation in time series data for eight oecd countries

foreign direct investment pollution and economic growth evidence from malaysia the bounds test developed by pesaran et al 2001 is applied to examine the existence of a long run relationship between foreign direct investment fdi inflows pollution and output of malaysia granger causality tests are also utilized to test for the presence of the short run and long run causal relationship between these variables both fdi inflows and pollution have short run causal relationship on output output only has long run causal relationship on fdi inflows

foreign direct investment and growth in india a cointegration approach the two way link between foreign direct investment and growth for india is explored using a structural cointegration model with vector error correction mechanism the existence of two cointegrating vectors between gdp fdi the unit labour cost and the share of import duty in tax revenue is found which captures the long run relationship between fdi and gdp a parsimonious vector error correction model vecm is then estimated to find the short run dynamics of fdi and growth our vecm model reveals three important features a gdp in india is not granger caused by fdi the causality runs more from gdp to fdi b trade liberalization policy of the indian government had some positive short run impact on the fdi flow and c fdi tends to lower the unit labour cost suggesting that fdi in india is labour displacing

liberalization fdi and growth in developing countries a panel cointegration approach using a panel cointegration framework the article explores the two way link between fdi and growth for a panel of 23 developing countries in addition it investigates the impact of liberalization on the dynamics of the fdi and gdp relationship a long run cointegrating relationship is found between fdi and gdp after allowing for heterogeneous country effects the cointegrating vectors reveal a bidirectional causality between gdp and fdi for more open economies for relatively closed economies long run causality appears unidirectional and runs from gdp to fdi implying that growth and fdi are not mutually reinforcing under restrictive trade and investment regimes

scaling up finance for off grid renewable energy the role of aggregation and spatial diversification in derisking investments in mini grids for rural electrification in india abstract today about 1 1 billion people lack access to electricity worldwide it is estimated that annual investments of 48 billion usd are required to meet the target of the sustainable development goals of providing universal electricity access by 2030 the need for private investments to meet this target is evident but small scale electrification projects are often unattractive for private investors due to unfavourable risk return profiles and small investment volumes both issues can potentially be addressed by aggregating projects into diversified portfolios an approach commonly used by investors in several contexts but little investigated in the context of rural electrification this paper addresses the question of how spatial diversity in a portfolio can be used to reduce investment risks and increase investment volumes through a mixed method approach involving three steps i identification and classification of investment risks for renewable energy mini grid projects ii qualitative analysis of the correlations between investment risks for different projects through interviews and iii quantitative estimation of the cost of capital and derisking effects of spatial diversification strategies for an experimental portfolio in india we discuss the implications for policymakers in promoting and facilitating the ability of private sector investors to aggregate small scale electrification investments

real options analysis for renewable energy investment decisions in developing countries abstract renewable energy projects in developing countries should provide clean energy supply as well as support sustainable economic development to this end risks arising from uncertainties such as rapidly changing technologies and host government conditions should be carefully addressed however traditional methods for economic assessment are not adequate to support decision making regarding investments in renewable energy this paper proposes a real options analysis framework as a tool to assess renewable energy investment in developing countries a case study involving a hydropower project in indonesia was conducted to validate and verify the proposed framework this framework is expected to help host countries and investors assess renewable energy projects with high volatility and risk

the macroeconomic dynamics of tariffs a symmetric two country analysis this paper examines the macroeconomic dynamics of tariffs the adverse microeconomic effects of tariffs have been exhaustively discussed in the international trade literature however there are still some debate and discussion on the effects of tariffs on the macroeconomy in the mainstream open economy macroeconomics literature it is argued that the impact of imposing a tariff is likely to be contractionary under flexible exchange rates 1 this view however has been challenged first by the cambridge economic policy group cripps and godley 3 and more recently by ford and sen 7 given the fact that commercial policies have recently returned to playing a more central role in policy debates this then leads to a revival of interest in the effects of tariffs on macroeconomic aggregates one important drawback of the analyses in the literature is that they all assume that the domestic economy faces a given world price of imports i e they focus exclusively on small open economies with virtually no attention being devoted to two country models 2 it is surely a question of relevance to examine the cross country impact of protection although considerable effort has been devoted to examine the international transmission of fiscal and monetary policies recently corden and turnovsky 2 svensson and van wijnbergen 13 little has been done on commercial policies in a two country framework 3 it is our intention therefore to relax the small country assumption to study the transmission effect of tariffs in this paper we discuss how likely a tariff will be beggar thy neighbor our main concern is the dynamic effects of a tariff on domestic and foreign aggregates we pay special attention to the distinction between anticipated and unanticipated permanent tariff changes 4 the case of a temporary tariff is also examined the analysis is conducted in a modified two country mun

tariffs and sectoral adjustments in an open economy abstract this paper analyzes the impact of a tariff on sectoral adjustments in an economy which produces two traded consumption goods one of which is exported and one nontraded investment good the importance of sectoral capital intensities is emphasized in particular the qualitative dynamic adjustment depends upon the relative capital intensities of the import competing consumption good sector and the nontraded investment good sector sectoral labor allocation effects are analyzed and the long run effect on aggregate capital accumulation is shown to depend upon the relative capital intensities of the import and export sectors temporary as well as permanent tariffs are discussed

do spillover benefits grow with rising foreign direct investment an empirical examination of the case of china using data from the chinese manufacturing industry for 2001 this article examines the impacts of foreign presence on the performance of locally owned chinese firms our key result supports a curvilinear functional form foreign penetration rates in excess of just about two thirds of industrial capital are associated with declining spillover benefits indicating the dominance of negative spillovers the curvilinear relationship is found to be particularly strong in labour intensive industries contrasting with a standard linear relationship in technology intensive sectors the finding of the complexity of spillover effects challenges the laissez faire view that the more inward foreign direct investment fdi the better and that inward fdi into all types of domestic industry is equally valuable in terms of performance benefits our findings argue for policy measures to strengthen domestically owned chinese industry to provide effective competition to foreign firms and to absorb the benefits from spill

power sector investment risk and renewable energy a japanese case study using portfolio risk optimization method the conventional pricing mechanism used for electricity systematically hides huge investment risks which are embedded in the overall cost of production although consumers are often unaware of these risks they present a large financial burden on the economy this study applies the portfolio optimization concepts from the field of finance to demonstrate the scope of greater utilization of renewable energies re while reducing the embedded investment risk in the conventional electricity sector and its related financial burden this study demonstrates that re investment can compensate for the risks associated with the total input costs such costs being external volatilities of fossil fuel prices capital costs operating and maintenance costs and the carbon costs by means of example this case study shows that japan could in theory obtain up to 9 of its electricity supply from green sources as compared to the present 1 37 based on the utilization of a portfolio risk analysis evaluation explicit comparison of the monetary values of the investment risks of conventional and renewable energy sources shows that renewable energies have high market competitiveness the study concludes with a recommendation that as a business objective investors would benefit by focusing on electricity supply portfolio risk minimization instead of cost this could also inherently increase the supply of renewable energy in the market

portfolio optimization of renewable energy assets hydro wind and photovoltaic energy in the regulated market in brazil abstract this study proposes a methodology for risk analysis and portfolio optimization of power generation assets with hydro wind and solar power considering the regulated contracting environment and the mechanism for reallocation of energy in brazil innovative stochastic models are used to generate synthetic time series for the random variables water inflow wind speed solar irradiance temperature of the photovoltaic panel and average generation capacity of the mechanism for reallocation of energy the simulation is implemented using the monte carlo method associated with a cholesky decomposition an economic approach is presented taking into account taxation and financing as well as the markowitz portfolio theory the results show that the initial correlation between the energy resources is altered by the cash flow model and mainly by the debt in the diversification process the complementarity between sources helps to reduce the economic risk the increase in debt increases the correlation decreases the return and risk and consequently affects the diversification process and economic results the mechanism for reallocation of energy significantly reduces the hydroelectric economic risk and increases the financial return which directly benefits the formation of portfolios

using renewables to hedge against future electricity industry uncertainties an australian case study abstract a generation portfolio modelling was employed to assess the expected costs cost risk and emissions of different generation portfolios in the australian national electricity market nem under highly uncertain gas prices carbon pricing policy and electricity demand outcomes were modelled for 396 possible generation portfolios each with 10 000 simulations of possible fuel and carbon prices and electricity demands in 2030 the lowest expected cost generation portfolio includes 60 renewable energy increasing the renewable proportion to 75 slightly increased expected cost by 0 2 mwh but significantly decreased the standard deviation of cost representing the cost risk increasing the renewable proportion from the present 15 to 75 by 2030 is found to decrease expected wholesale electricity costs by 17 mwh fossil fuel intensive portfolios have substantial cost risk associated with high uncertainty in future gas and carbon prices renewables can effectively mitigate cost risk associated with gas and carbon price uncertainty this is found to be robust to a wide range of carbon pricing assumptions this modelling suggests that policy mechanisms to promote an increase in renewable generation towards a level of 75 by 2030 would minimise costs to consumers and mitigate the risk of extreme electricity prices due to uncertain gas and carbon prices

energy planning and modern portfolio theory a review abstract modern portfolio theory mpt stands as a widely accepted methodology to meet the challenges associated with the definition of energy planning for a particular territory or region energy planning is thus framed as an investment selection problem mpt is characterized by having a wider capacity and conceptual richness than the other previously used methodologies such as the individual least cost alternative the portfolio approach is based on solving for an objective function that seeks to minimize either the cost or the risk of the portfolio subject to different constraints considering that real electricity generation assets can be defined in terms of cost or return and economic risk for each alternative technology the relevant portfolios are the result of solving the optimization model to determine the efficient cost risk frontier the work presented here consists of an exhaustive review of the literature in relation to the application of mpt methodology to the field of energy planning and electricity production a new classification is proposed from a financial perspective of the selection of investments from the preceding studies it delves deeper into the explanation of the limits to the methodology and into the concept of risk which is key from both a financial and an energy perspective the main methodological contributions found in the literature are examined that are aimed at improving the capacity of the model and adjusting it to the reality of the electricity market finally conclusions are provided from the works analyzed in terms of renewable technologies and the policy implications derived from them in most studies a preference has been shown for the inclusion of renewable technologies in the efficient portfolios however in order to implement the decision to increase the share of renewable technologies greater flexibility in the interconnection capacity between states and in storage capacity is needed

the 45 years of foreign direct investment research approaches advances and analytical areas what are the main tenets associated with foreign direct investment fdi what research has been performed in the area of fdi to date which direction should research in this field proceed in the days to come as there is no article with comprehensive coverage of all the studies on fdi we review empirical research in this area between the years 1970 and 2014 as an attempt to answer these questions we identify the advances and analytical areas of fdi research list out the impactful research papers and authors theoretical and methodological approaches leading journals and variables of interest that exist in the area of fdi research as the research into the fdi has advanced significantly over the last two decades we have also tried to point out the gaps in the literature taken together our paper highlights the heterogeneous nature of fdi across countries and firms

tariffs and the current account abstract this paper examines the impact of a tariff on the current account in a model which emphasizes the fact that it takes time for the production sector of an economy to adjust to a change in relative prices income effects of the adjustment lead to a transitory current account surplus because the deleterious effect of the tariff on national income is larger in the long run than in the short run in addition relative prices overshoot in response to the tariff leading to an increase in the consumption rate of interest which in turn generates an increase in desired saving

exchange rate pass through and the effects of tariffs on economic performance and welfare abstract we develop a stochastic two country general equilibrium model where prices are determined under conditions of monopolistic competition to examine the macroeconomic and welfare effects of tariffs on the world economy under alternative nominal rigidities producer currency pricing pcp and local currency pricing lcp where the exchange rate pass through is absent we find that the significance of export pricing for the effects of tariffs depends critically upon whether tariffs are anticipated or unanticipated in the former case both pcp and lcp yield the same outcome as do perfectly flexible prices although the mechanism whereby this is achieved is different in the latter case the effects of unanticipated permanent tariffs are highly sensitive to the pricing scheme adopted by exporters leading to a wide range of conflicting outcomes involving tradeoffs among key parameters

a dynamic model of tariffs output and employment under flexible exchange rates abstract a portfolio balance model of the open economy with imperfectly flexible wages and rational expectations is used to analyze the macroeconomic effects of commercial policy previous analyses have led to the counterintuitive and almost inconceivable conclusion that under flexible exchange rates a tariff is contractionary by considering a tariff in a dynamic setting and focusing on the process of adjustment it is shown that there may exist a tradeoff between a tariffs short run and long run effects in certain circumstances a tariff imposed under flexible exchange rates increases output and employment initially while reducing them subsequently

who invests in renewable electricity production empirical evidence and suggestions for further research transforming energy systems to fulfill the needs of a low carbon economy requires large investments in renewable electricity production res e recent literature underlines the need to take a closer look at the composition of the res e investor group in order to understand the motives and investment processes of different types of investors however existing energy policies generally consider res e investments made on a regional or national level and target investors who evaluate their res e investments according to least cost high profit criteria we present empirical evidence to show that res e investments are made by a heterogeneous group of investors that a variety of investors exist and that their formation varies among the different types of renewable sources this has direct implications for our understanding of the investment process in res e and for the study of motives and driving forces of res e investors we introduce a multi dimensional framework for analyzing differences between categories of investors which not only considers to the standard economic dimension which is predominant in the contemporary energy literature but also considers the entrepreneurship innovation adoption and institutional dimensions the framework emphasizes the influence of four main investor related factors on the investment process which should be studied in future research motives background resources and personal characteristics

the japanese energy sector current situation and future paths abstract as the world s third leading economy and a major importer of fuels the choice of future energy paths and policies that japan makes in the next few years will have a significant influence on the energy security of the world as a whole and of the northeast asia region in particular in this article we describe the current status of and recent trends in the japanese energy sector including energy demand and supply by fuel and by sector we then discuss the current energy policy situation in japan focusing on policies related to climate change targets renewable energy development and deployment liberalization of energy markets and the evolution of the japanese nuclear power sector the final section of the article presents the structure of the japan leap long range energy alternatives planning software system dataset describes several alternative energy paths for japan with an emphasis on alternative paths for nuclear power development and ghg emission abatement and touches upon key current issues of energy policy facing japan as reflected in the modeling inputs and results