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

modeling unit commitment in political context case of china s partially restructured electricity sector restructuring an electricity sector entails a complex realignment of political and economic institutions which may both delay and distort the achievement of satisfactorily competitive conditions in research and planning for policy interventions in power systems under these varied regulatory environments typical operational models may neglect important interactions between techno economic criteria and political constraints leading to poor understanding of underlying causes of inefficiency and to inappropriate recommendations we develop tractable formulations of the unit commitment problem based on integer clustering of similar units that endogenize important political factors in the northeast grid region of china we demonstrate the importance of these interactions on operations and provide a set of options for researchers to explore further pathways for china s ongoing power system reforms for example wind integration a key policy priority is inhibited by the interaction of institutions limiting short and long term sources of flexibilities in interprovincial trade

levelized cost of electricity lcoe of renewable energies and required subsidies in china newhuadu business school research fund china sustainable energy program g 1305 18257 national social science foundation of china 12zd059 ministry of education 10 jbg 013

the innovation impact of the eu emission trading system findings of company case studies in the german power sector abstract this paper provides a detailed analysis of how the european emission trading system eu ets as the core climate policy instrument of the european union has impacted innovation towards this end we investigate the impact of the eu ets on research development and demonstration rd d adoption and organizational change in doing so we pay particular attention to the relative influences of context factors policy mix market factors and public acceptance and firm characteristics value chain position technology portfolio size and vision empirically our qualitative analysis is based on multiple case studies with 19 power generators technology providers and project developers in the german power sector which were conducted in 2008 09 we find that the innovation impact of the eu ets has remained limited so far because of the scheme s initial lack of stringency and predictability and the relatively greater importance of context factors additionally the impact varies significantly across technologies firms and innovation dimensions and is most pronounced for rd d on carbon capture technologies and organizational changes our analysis suggests that the eu ets on its own may not provide sufficient incentives for fundamental changes in corporate innovation activities at a level which ensures political long term targets can be achieved

prospects for global market expansion of china s wind turbine manufacturing industry abstract emerging economies are increasingly contributing to global innovation including clean tech innovation the development of china s wind power sector has often been used to illustrate this point china s domestic wind power market is the largest in the world and is largely supplied by domestic manufacturers competition for market share in the domestic market may pressure firms to innovate which consecutively improves prospects for global expansion this paper reviews developments in china s domestic wind turbine market using the technological innovation system framework we analyze the pressure to innovate arising from market competition and assess the prospects for global expansion of chinese wind turbine manufacturers we conclude that domestic customers are not pressured or incentivized to perform with respect to power output such that turbine manufacturers are not pressured to perform with respect to turbine efficiency or maintenance needs pressure to innovate is further reduced by formalizing connections between wind farm developers and turbine manufacturers chinese turbine manufacturers cannot yet compete with leading global brands in technological leadership the prospects for exports are improved however by the preferential supply of project financing from institutional investors such as the china development bank from chinese utilities that seek global expansion and from the manufacturers themselves

a real options valuation of chinese wind energy technologies for power generation do benefits from the feed in tariffs outweigh costs abstract in order to assess the viability of wind energy projects in china this paper takes a real options approach by accounting for flexibility over deployment of the technology in response to a stochastic non renewable energy cost the difference between the latter and the r d enhanced cost of renewable energy operation may be thought of as a benefit from using wind on the other hand the chinese government provides feed in tariffs to encourage further adoption of wind which should be included as a cost this work thus shows that there is substantial options value to china s wind energy program which is bolstered if the cost of carbon dioxide emissions is internalized moreover by varying the rate of feed in tariffs the model may be used to show plausible ranges for the feed in tariffs which could be a useful policy insight furthermore the study hypothesizes that with the likelihood of renewable energy to replace non renewable energy wind power in china can potentially reduce co2 emissions by approximately 6 4 by 2020 comparing to the 2005 level and highlights the significant role of wind power in china s emission targets and energy security this is a relevant paper especially given the importance of a sustainable energy transition for china more generally using the real options approach from a policy perspective could provide insights about the viability of renewable energy programs and robustness of feed in tariffs rates

profitability of wind energy investments in china using a monte carlo approach for the treatment of uncertainties abstract china is the global leader in terms of installed wind capacity further wind energy development is expected for the next years and decades to meet the continuously increasing electricity demand and the need of using clean domestic energy since 2009 china is divided into four geographical regions each assigned with a different benchmark on grid tariff moreover the existing infrastructures are not equally developed throughout the country making investment decisions more complicated and risky the scope of this paper is to apply an innovative methodology and evaluate the attractiveness of each region for wind energy development by taking into consideration all relevant investment risks such as wind potential wind curtailment access to the grid and macroeconomic parameters to this purpose a monte carlo simulation approach integrated into a typical financial model is implemented in each of the four regions performing many hundreds of iterations each characterized by a randomly selected set of the examined uncertain parameters this approach intends to provide information to private investors doing a first exploratory research in the huge country s area in order to decide whether and where to invest as well as to policy makers to help them assess critical policy parameters and investigate different scenarios of wind energy development the evaluation of the current framework for wind energy development in china verifies that the existing system of feed in tariffs in china is very effective for the balanced deployment of wind energy in the whole country however it is shown that the risk of curtailment and grid accessibility may significantly reduce the potential profitability of wind energy investments in all four regions priority for development of infrastructures should be given in isolated northern windy areas with high accumulation of wind farms

large scale utilization of wind power in china obstacles of conflict between market and planning the traditional strict planning system that regulates china s power market dominates power industry operations however a series of market oriented reforms since 1997 call for more decentralized decision making by individual market participants moreover with the rapid growth of wind power in china the strict planning system has become one of the significant factors that has curtailed the generation of wind power which contradicts with the original purpose of using the government s strong control abilities to promote wind power development in this paper we first present the reasons why market mechanisms are important for large scale utilization of wind power by using a case analysis of the northeast grid and then we illustrate the impact of conflicts between strict planning and market mechanisms on large scale wind power utilization last we explore how to promote coordination between markets and planning to realize large scale wind power utilization in china we argue that important measures include implementing flexible power pricing mechanisms instead of the current fixed pricing approach formulating a more reasonable mechanism for distributing benefits and costs and designing an appropriate market structure for large scale wind power utilization to promote market liquidity and to send clear market equilibrium signals

renewable energy policy evaluation using real option model the case of taiwan abstract this study presents a policy benefit evaluation model that integrates cost efficiency curve information on renewable power generation technologies into real options analysis roa methods the proposed model evaluates quantitatively the policy value provided by developing renewable energy re in the face of uncertain fossil fuel prices and re policy related factors the economic intuition underlying the policy making process is elucidated while empirical analysis illustrates the option value embedded in the current development policy in taiwan for wind power in addition to revealing the benefits that re development provides when considering real options analytical results indicate that roa is a highly effective means of quantifying how policy planning uncertainty including managerial flexibility influences re development in addition to assessing the policy value of current re development policy this study also compares policy values in terms of internalized external costs and varying feed in tariff fit simulation results demonstrate that the re development policy with internalized co2 emission costs is appropriate policy planning from sustainability point of view furthermore relationship between varying fit and policy values can be shown quantitatively and appropriate fit level could be determined accordingly

market segmentation and wind curtailment an empirical analysis abstract china s wind power has experienced explosive growth and reshaped the overall energy mix since 2009 however increasing investment in the wind power industry has been accompanied by persistent and serious wind curtailment since 2010 leading to significant efficiency loss this paper argues that the interprovincial market segmentation which is driven by political motivations is a key factor contributing to wind curtailment we first construct an interprovincial electricity market segmentation index this is then used as an independent variable to explain the variation in wind curtailment rates a panel dataset of 28 provinces during the 2009 2016 period is used for empirical analysis the results clearly show that market barriers positively contribute to wind power curtailment specifically a 10 decrease in the market segmentation index will lead to a 4 3 5 3 decrease in wind power curtailment

investment in wind power and pumped storage in a real options model abstract promoting renewable energy has been a key ingredient in energy policy seeking to de carbonize the energy mix and will continue to do so in the future given the european union s high ambitions to further curb carbon emissions a wide range of instruments has been suggested and implemented in various countries of the eu a prominent policy promoting investment in renewable technologies is the use of feed in tariffs which has worked well at large scale in e g germany but which has only been implemented in a very limited way in countries such as the uk being subject to environmental uncertainties however renewables cannot be seen in isolation while renewables based technologies such as wind and solar energy for example suffer from uncertain loads depending on environmental conditions hydropower allows for the storage of water for release at peak prices which can be treated as a premium partially offsetting higher upfront investment costs in addition electricity prices will respond to changes in electric capacity in the market which is often neglected in standard investment models of the electricity sector this paper contributes to the existing literature in two ways it provides a review of a renewables based technology in a specific policy context and provides additional insight by employing a real options approach to investigate the specific characteristics of renewables and their associated uncertainties in a stylized setting taking explicitly into account market effects of investment decisions the prices of the model are determined endogenously by the supply of electricity in the market and by exogenous electricity price uncertainty the inclusion of market effects allows us to capture the full impact of public incentives for companies to invest into wind power and hydro pumped storage installations

a panel data analysis of the fungibility of foreign aid the donor community has been increasingly concerned that development assistance intended for crucial social and economic sectors might be used directly or indirectly to fund unproductive military and other expenditures the link between foreign aid and public spending is not straightforward because some aid may be fungible this article empirically examines the impact of foreign aid on the recipient s public expenditures using cross country samples of annual observations for 1971 90 for the base sample of 14 developing countries it finds that aid is not fungible at the aggregate level and there is no associated tax relief increasing the number of countries however makes aid fungible moreover results based on the main sample indicate that aid is fungible in three out of five sectors examined developing country governments receiving earmarked concessionary loans for agriculture education and energy reduce their own resources going to these sectors and use them elsewhere only loans to the transport and communication sector are fully spent on the purposes intended by donors because most aid appears to be fungible the rate of return on a specific donor funded project tells little about the impact of that assistance a better approach may be to tie foreign aid to an overall public expenditure program that provides adequate resources to crucial sectors

the ethology of homo economicus early critics of john stuart mill attacked him for creating a monomaniacal economic man concerned only with the accumulation of money in fact mill s construct possessed a considerably richer psychology including desires for leisure luxury and sexual relations this psychology played a central role in mill s analysis of alternative institutional regimes mill also considered the social origins or ethology of preference structures mill s framework provides a useful reference point for ongoing work in comparative economics and feminist economics in particular mill s emphasis on psychological parsimony needs careful reconsideration by advocates of enriching the motives of economic man

china s 2020 clean energy target consistency pathways and policy implications abstract china has proposed its 2020 clean energy target together with the climate change target of reducing co2 intensity of the economy by 40 45 below the 2005 level this article investigates the feasibility of these targets by testing their consistency under possible economic development scenarios we analyse these targets from two perspectives consistency with the overall economic growth and consistency with the international society s expectation on china s greenhouse gas ghg abatement responsibilities the main findings are under the recently announced 2020 target of gross domestic product gdp that is double the 2010 level the adoption of a 15 clean energy target could result in excessive primary energy demand and then with 40 45 gdp co2 intensity reduction co2 emissions in 2020 could substantially exceed the international energy agency iea 450 ppm scenario for china thus we propose a 17 clean energy target that can reconcile the domestic plan with international expectation our article also outlines the pathways to realise clean energy development into 2020 and proposes policy recommendations

evaluating the economic impact of wind power development on local economies in china abstract given that wind power has received so much public financial support it is important not only to understand its overall impact but also who receives the benefits and who bears the costs one important aspect is to quantitatively evaluate the potential impact of wind power development on local economies this study conducts an ex post econometric assessment of the effect of wind power installation on local economy in china using a national county level dataset between 2005 and 2011 we find that installed wind power capacity has a small and statistically significant positive effect on gdp but negatively affect local fiscal income based on our results an additional 1 mw wind power installation per capita would bring 2246 rmb increase in gdp per capita over the year 2005 and 2011 the annual benefits is about 321 rmb 45 increase in gdp per person which is much lower than the estimates for u s case we further explore why china s wind power development did not benefit local economy as much as the case of u s

a real option model for renewable energy policy evaluation with application to solar pv power generation in china abstract this study proposes a policy evaluation model from the perspective of government and investors the proposed model which integrates american option method and two factor learning curve method can be used to evaluate the unit decision value and save path rate for renewable energy development and examine the existence of balance point of interest several uncertain factors including non renewable energy cost carbon price renewable energy cost and price subsidy are all considered in this model the model has been applied to evaluate the solar photovoltaic pv power generation in china our empirical results show that real option analysis roa is more effective than net present value analysis npv when handling uncertainty under current level of subsidy the government would suffer loss and the investors could benefit so that it is difficult to achieve the balance of interest during the planning period with the reduction of subsidy rate they can achieve the balance of interest

the impact of chinese carbon emission trading scheme ets on low carbon energy lce investment china is planning to introduce emission trading scheme ets to decrease co2 emission as low carbon energy lce will play a pivotal role in reducing co2 emissions our paper is to assess the extent and the conditions under which a carbon ets can deliver lce investment in china we chose wind technology as a case study and a real option based model was built to explore the impact of a number of variables and design features on investment decisions e g carbon and electricity price carbon market risk carbon price floor and ceiling and on grid ratio we compute critical values of these variables and features and explore trade offs among them according to our work a carbon ets has a significant effect on wind power plant investment although it cannot support investment in wind power on its own carbon price stabilization mechanisms such as carbon price floor can significantly improve the effect of carbon ets but the critical floor to support investment is still much higher than the carbon price in china pilot etss our results show that other policy measures will be needed to promote low carbon energy development in china

a macroeconomic model with a financial sector this paper studies a macroeconomic model in which financial experts borrow from less productive agents we pursue four sets of results i the economy is prone to instability and occasionally enters volatile episodes as volatility spikes agents precautionary motive increases depressing prices even further log linear approximations fail to capture these non linear effects that can cause economies to be significantly depressed for long periods of time ii endogenous risk during volatile episodes increases asset price correlations iii financial experts impose a negative externality on each other and on the labor sector by not maintaining adequate capital cushion and funding structure iv while risk sharing within the financial sector through securitization and derivatives contracts reduces many inefficiencies it can also amlify systemic risks

financial development credit and business cycles how does financial development affect the magnitude of the business cycles fluctuations we examine this question in a general equilibrium model with heterogeneous agents and endogenous credit constraints based on kiyotaki 1998 we show that there is a hump shaped relationship between the degree of financial frictions and the amplification of unexpected productivity shocks this nonmonotonic relation is due to the fall in financial frictions having two opposite effects on the response of output one effect is the reallocation of productive inputs between agent types which while active increases with the fall in financial frictions the other effect is the change in the demand of inputs which decreases with the fall in financial frictions at low levels of financial development the reallocation effect dominates and a fall in financial frictions increases the amplification of productivity shocks in contrast at higher levels of financial development a fall in financial frictions decreases the shock amplification because the reallocation effect disappears while the effect on the demand of inputs is still present

the impact of international forces on the chinese wind power industry abstract the chinese wind power industry has achieved remarkable growth in the last two decades the total installed capacity of wind power in china has now surpassed that of the united states thereby making it the country with the largest installed wind power capacity in the world the independent and innovative capability of chinese wind turbine manufacturers has undergone continuous improvement and has now reached the point where the country has the capability to produce large scale wind turbines although the chinese domestic policy incentive has played a significant role in the rapid development of the chinese wind power industry the contribution made by external international forces should not be overlooked this research aims to establish a comprehensive model reflecting the international forces that impact on the chinese wind power industry this model consists of three subsystems i e 1 the international cooperation subsystem 2 the clean development mechanism cdm subsystem and 3 the import export subsystem using the model as part of the research the findings suggest that for the international cooperation subsystem joint research and development rd however its effect in terms of the diffusion of technical information and technical capability is weak similarly the degree of dependence of chinese wind turbine manufacturing on imports is weakening as domestic wind turbine manufacturers actively explore overseas markets this comprehensive model helps both international and domestic wind power investors to understand the impact of international forces on the chinese wind power industry resulting in better investment decisions and the consequential minimization of risk

short term variations and long term dynamics in commodity prices in this article we develop a two factor model of commodity prices that allows meanreversion in short term prices and uncertainty in the equilibrium level to which prices revert although these two factors are not directly observable they may be estimated from spot and futures prices intuitively movements in prices for long maturity futures contracts provide information about the equilibrium price level and differences between the prices for the short and long term contracts provide information about short term variations in prices we show that although this model does not explicitly consider changes in convenience yields over time this short term long term model is equivalent to the stochastic convenience yield model developed in gibson and schwartz 1990 we estimate the parameters of the model using prices for oil futures contracts and apply the model to some hypothetical oil linked assets to demonstrate its use and some of its advantages over the gibson schwartz model

china s wind power industry policy support technological achievements and emerging challenges abstract since 2005 the chinese wind power technology industry has developed rapidly with china becoming the largest installer of wind power capacity in the world in 2010 this paper reviews the policy system implemented in china to support the wind power industry centered on china s 2005 renewable energy law it examines the industry s achievements over the past two decades including the development of wind power technology and equipment the utilization of china s wind power resources and the cost reductions achieved it then explores the obstacles affecting the ongoing sustainability of the chinese wind industry including regulatory barriers grid integration challenges and challenges to continued technological innovation it recommends that integration challenges be addressed through policy reforms establishing interconnection standards and creating predictability with forecasting and storage that market signals be established with long term development goals and pricing reforms and that industry limitations be addressed with targeted r d improved wind resource assessment and transparency domestic and international collaborations and the cultivation of a skilled workforce

factors influencing co2 emissions in china s power industry co integration analysis more than 40 of china s total co2 emissions originate from the power industry the realization of energy saving and emission reduction within china s power industry is therefore crucial in order to achieve co2 emissions reduction in this country this paper applies the autoregressive distributed lag ardl co integration model to study the major factors which have influenced co2 emissions within china s power industry from 1980 to 2010 results have shown that co2 emissions from china s power industry have been increasing rapidly from 1980 to 2010 the average annual growth rate was 8 5 and the average growth rate since 2002 has amounted to 10 5 secondly the equipment utilization hour as an indicator of the power demand has the greatest influence on co2 emissions within china s power industry in addition the impact of the industrial added value of the power sector on co2 emissions is also positive from a short term perspective thirdly the granger causality results imply that one of the important motivators behind china s technological progress within the power industry originates from the pressures created by a desire for co2 emissions reduction finally this paper provides policy recommendations for energy saving and emission reduction for china s power industry

the fungibility of aid earmarked for hiv aids control programs summary this paper investigates fungibility of official development assistance oda for hiv aids control adding to the debate regarding consequences of scaling up this type of oda a theoretical model yields two estimable equations in public health spending and non health spending with oda for hiv aids as the key regressor the equations are estimated using data for 52 countries from 2003 to 2009 results suggest oda for hiv aids is not fungible across the 52 countries fungibility and other constraints to effective use of increased oda in health sectors are country specific issues oda for hiv aids must be delivered via mechanisms specific to country contexts

barriers and opportunities of using the clean development mechanism to advance renewable energy development in china studying the barriers and opportunities of using clean development mechanism cdm to advance renewable energy deployment in china has a practical significance to achieve its ambitious renewable energy plan which affects the global efforts to curb carbon emission this paper analyses the role of cdm in promoting renewable energy development in china by reviewing the cdm activities especially renewable energy cdm activities in china there are three barriers to utilizing cdm for renewable energy deployment namely the dilemma of additionality lower proportional certified emission reduction credit revenues on the investment and the lack of incentive for technology transfer whereas the opportunities of using cdm in promoting renewable energy development include the international carbon market redirection to renewable energy chinese renewable energy boom driven by a series of effective energy policies and additional finance from cdm supporting chinese renewable energy development based on the study on the barriers and opportunities the article considers that cdm is an indispensable incentive and a viable choice to promote renewable energy deployment in china crown copyright c 2010 published by elsevier ltd all rights reserved

wind farm investment risks under uncertain cdm benefit in china abstract china has set an ambitious target to increase its wind power capacity by 35 gw from 2007 to 2020 the country s hunger for clean power provides great opportunities for wind energy investors however risks from china s uncertain electricity market regulation and an uncertain energy policy framework mainly due to uncertain clean development mechanism cdm benefits prevent foreign investors from investing in china s wind energy the objectives of this paper are to 1 quantify wind energy investment risk premiums in an uncertain international energy policy context and 2 evaluate the impact of uncertain cdm benefits on the net present values of wind power projects with four scenarios this study simulates possible prices of certified emissions reductions cers from wind power projects project net present values npvs have been calculated the project risk premiums are drawn from different and uncertain cer prices our key findings show that uncertain cdm benefits will significantly affect the project npvs this paper concludes that the chinese government needs revising its tariff incentives most likely by introducing fixed feed in tariffs fits and re examining its cdm granting policy and its wind project tax rates to facilitate wind power development and enable china to achieve its wind energy target

between fragmented authoritarianism and policy coordination creating a chinese market for wind energy abstract the chinese grid connected wind energy sector has undergone a number of fundamental changes during its 20 years of existence the scope of this article is to track the reforms of the energy bureaucracy and its policy approach on the one hand and changes in wind energy installations on the other by comparing three historically distinct phases of wind energy in china it is shown how policy reforms have changed largely from a state of fragmented authoritarianism towards policy coordination in the initial phase 1986 1993 wind energy was expanding very slowly with disjointed policy making and in the incremental phase 1994 1999 the energy authorities were in dispute over the strategy and launched conflicting policy initiatives with poor results in wind energy output the latest coordinated phase 2000 2006 however developed a coherent renewable energy agenda and policy regime for the wind power sector it is found that this phase with coordinated market regulations and incentives has helped give birth to a take off in chinese wind energy installations and substantial cost reductions although the latter is threatening the profitability of wind farms the article contributes to the academic debate over the role of policy making in renewable energy development and argues that china should continue and improve the coordination of regulations and incentives

the role of feed in tariff in the curtailment of wind power in china abstract while china s wind power initiative has experienced rapid growth serious curtailment issues persist though some studies have investigated this matter we explain this phenomenon from the novel perspective of excess capacity we first set up a theoretical model to explore the mechanism behind excess investment and find that the sticky feed in tariff fit and declining costs of wind power generate high mark up for wind power investors leading to a higher probability of excessive investment the theoretical prediction is empirically tested with a probit and tobit model using provincial level data between 2009 and 2016 the estimation results show that a 0 1 yuan increase in the mark up leads to a 2 3 increase in the rate of curtailed wind power based on the estimation results we simulate several scenarios to assess quantitatively how an improved policy design could have alleviated the curtailment issue simply increasing the frequency of the fit rate adjustment while maintaining the same subsidy reduction level between 2009 and 2016 could have reduced the curtailed wind power by 23 to 27 billion kwh accounting for 15 17 of actual curtailed wind power if the policy were better designed to reflect the declining trend of wind power costs more accurately the curtailment rates could have been further reduced by 2 81 corresponding to a reduction in wasted wind energy of 43 billion kwh or 28 of actual curtailment although accepting curtailment for a certain period could help to accelerate renewable energy deployment our analysis shows that the fit policy design could have been improved to reduce welfare loss these findings can not only assist the chinese government in framing effective policies but also may be applied to other emerging technologies or industries that require subsidy support

the evolving role of carbon finance in promoting renewable energy development in china abstract the world is negotiating what the international climate change regime will look like after 2012 the year that current kyoto protocol greenhouse gas emissions reduction targets expire and the future of the clean development mechanism cdm is under discussion critics claim the scale of reductions that the cdm is driving in the developing world is insufficient from a scientific perspective if we are to avoid dangerous climate change that the project by project crediting process is inefficient and that the reductions being achieved are not additional meaning they would have happened anyway and thus should not be financially supported yet the efficacy of cdm must be examined in the broader context of carbon mitigation in the developing world and the actions that are taking place this paper examines the role that the cdm has played in promoting renewable energy development in china in order to assess how international carbon finance can best be used to help promote emissions mitigation in the developing world it also assesses how several options under consideration for reforming the current structure of the cdm in particular and developing country engagement in general may impact renewable energy development in china in the coming years

renewable energy investments under different support schemes a real options approach abstract this paper adopts a real options approach to analyze investment timing and capacity choice for renewable energy projects under different support schemes the main purpose is to examine investment behavior under the most extensively employed support schemes namely feed in tariffs and renewable energy certificate trading we consider both multiple sources of uncertainty under each support scheme and uncertainty with respect to any change of support scheme and we obtain both analytical when possible and numerical solutions in a nordic case study based on wind power we find that the feed in tariff encourages earlier investment nevertheless as investment has been undertaken renewable energy certificate trading creates incentives for larger projects in our baseline scenario and taking the fixed feed in tariff as a base the revenue required to trigger investments is 61 higher with renewable certificates at the same time investment capacity is 61 higher

european co2 prices and carbon capture investments we assess the option to install a carbon capture and storage ccs unit in a coal fired power plant operating in a carbon constrained environment we consider two sources of risk namely the price of emission allowance and the price of the electricity output first we analyse the performance of the eu market for co2 emission allowances specifically we focus on the contracts maturing in the kyoto protocol s first commitment period 2008 to 2012 and calibrate the underlying parameters of the allowance price process then we refer to the spanish wholesale electricity market and calibrate the parameters of the electricity price process we use a two dimensional binomial lattice to derive the optimal investment rule in particular we obtain the trigger allowance prices above which it is optimal to install the capture unit immediately we further analyse the effect of changes in several variables on these critical prices among them allowance price volatility and a hypothetical government subsidy we conclude that at current permit prices immediate installation does not seem justified from a financial point of view this need not be the case though if carbon market parameters change dramatically carbon capture technology undergoes significant improvements and or a specific governmental policy to promote these units is adopted

the need for improved financial reporting of a developing country energy utility abstract some consideration has been given to regulatory and institutional reforms to facilitate sustainable development in electricity usage in papua new guinea but little attention has been paid to bringing about full compliance of financial reporting expectations of the country s main energy utility examining documentary evidence of the audit reports of the auditor general s office of papua new guinea this study considers the financial reporting compliance of png power for the period 2007 2013 and the means by which compliant reporting may be improved the results of the study reveal that the financial statements of png power are late and receive disclaimers of opinion from the auditor general s office which suggest that png power s stakeholders are not receiving accurate and reliable financial information to make informed decisions about sustainable development of electricity usage and planning in papua new guinea the study reveals that it would take little resources to improve png power s reporting which in turn could enhance national energy policy decision making and energy utility accountability

can the future eu ets support wind energy investments abstract this article discusses how the future emissions trading scheme legislation should be designed to allow the european union to comply with the 20 co 2 emissions reduction target while at the same time promoting wind energy investments we examine whether co 2 prices could eventually replace the existing support schemes for wind and if they adequately capture its benefits the analysis also looks at the effectiveness of the clean development and joint implementation mechanisms to trigger wind projects and technology transfer in developing countries we find out that climate policy is unlikely to provide sufficient incentives to promote wind power and that other policies should be used to internalise the societal benefits that accrue from deploying this technology co 2 prices can only reflect the beneficial impact of wind on climate change but not its contribution to the security of supply or employment creation a minimum price of around 40 tco 2 should be attained to maintain present support levels for wind and this excludes income risks and intermediation costs finally cdm improves the return rate of wind energy projects in third countries but it is the local institutional framework and the long term stability of the co 2 markets that matters the most

from lagging to leading technological innovation systems in emerging economies and the case of chinese wind power there is increasing attention for the contribution of emerging economies to global innovation including innovation of renewable energy technologies the technological innovation systems tis framework presents a list of system functions for the analysis of the development of a technology it has often been applied to renewable energy technologies but with a strong focus on advanced economies in this paper we elaborate on emerging economy innovation system formation structured according to tis functions rather than analysing development of the technology we analyse the development of the chinese tis vis a vis the global forefront key to this notion is that tis especially for clean tech are transnational phenomena lagging tis depend on the global tis whereas leading tis contribute to its formation it is concluded that china has reduced its dependence on foreign knowledge and investment but the outward contribution remains limited the main challenge to foreign market expansion lies in reforming the domestic tis to focus on turbine quality rather than cost reduction demonstration projects are needed especially for large capacity and offshore turbine models in order to build up operational history and get quality certification

can carbon pricing support onshore wind power development in china an assessment based on a large sample project dataset abstract there is much discussion about whether the rapid expansion of onshore wind power in china is sustainable given the decrease in feed in tariffs fit it is unclear whether the recently launched nationwide carbon pricing system which will include 1700 power companies can compensate for decreasing fits and possibly provide new incentives for wind power developments this paper investigates the ability of carbon pricing policies to compensate for declining fits in support of onshore wind power investment in china first we constructed a dataset of 2059 onshore wind power projects from china s thirty provinces between 2006 and 2015 to estimate the levelized costs of electricity lcoe this dataset was used to assess the profitability of each wind project for different carbon prices varying levels of fits curtailment rate and discount rate our findings suggest that the carbon price can compensate partially for the revenue loss caused by declining fits as well as improving the profitability of projects however current carbon prices in china s carbon emission trading pilots are not sufficiently high to compensate for the revenue losses especially under the grid parity scenario consequently without fits the sustainable development of onshore wind power in china is uncertain a sensitivity analysis of the effect of the carbon pricing policy demonstrates that in the case of higher investment risk and more serious curtailment the effect of carbon pricing policy on promoting the wind power investment seems to be more significant

aid infrastructure and fdi assessing the transmission channel with a new index of infrastructure official development assistance oda and foreign direct investment fdi are widely perceived to be alternative means of supplementing domestic savings and promoting economic development in low and middle income countries however possible complementarities of aid and fdi have received limited attention so far it remains open to debate whether aid could render recipient countries more attractive to fdi by removing specific bottlenecks that prevent higher fdi inflows in particular we raise the hypothesis that aid specifically targeted at economic infrastructure helps developing countries attract higher fdi inflows through improving their endowment with infrastructure in transportation communication energy and finance by performing 3sls estimations we explicitly account for dependencies between three structural equations on the allocation of sector specific aid the determinants of infrastructure and the determinants of fdi we find strong and robust evidence that aid in infrastructure is effective in improving the recipient countries endowment with infrastructure in sharp contrast other aid is not effective in improving infrastructure infrastructure consistently proves to be an important determinant of developing countries attractiveness to fdi consequently only targeted aid promotes fdi indirectly through the infrastructure channel in addition aid in infrastructure has direct effects on fdi it appears that foreign investors anticipate longer term effects of aid on the country s endowment with infrastructure and expect aid financed infrastructure to serve them particularly well

the limited effect of eu emissions trading on corporate climate strategies comparison of a swedish and a norwegian pulp and paper company this article article examines to what extent and how the eu ets has influenced the climate strategies of two nordic pulp and paper companies swedish sca and norwegian norske skog rising electricity prices are perceived to be the greatest effect of the scheme the eu ets has served to reinforce commitments to improve energy efficiency and reduce co2 emissions in both companies studied procedures like monitoring of co2 emissions and accounting for co2 prices have become more significant since the introduction of the eu ets but the scheme has not triggered a search for innovative low carbon solutions due to differences in market factors and production factors sca has been more active than norske skog in investing in and implementing co2 lean actions future studies of climate mitigation activities strategies and innovations in the pulp and paper industry should involve more in depth investigation of the interactions between such factors and the eu ets c 2013 elsevier ltd all rights reserved less

the evolution of wind energy policies in china 1995 2014 an analysis based on policy instruments abstract the rapid growth of china s installed wind power capacity in recent years is closely related to the wind energy policies issued by the chinese government using content analysis and quantitative analysis methods this paper studies the historical evolution of chinese wind energy policies based on 72 wind energy policies issued in the past two decades 1995 2014 this paper analyzes the issuing organization form number and stringency of wind energy policies and compares different policy instruments in two periods the results show that the number and stringency of wind energy policies fluctuated greatly from 1995 to 2014 and that more than twenty organizations had independently or jointly issued the policies the main organization issuing wind energy policies however is the department that controls key economic and administrative resources and not the one that is in charge of wind energy of the 72 policies issued twenty three took the form of notices and eleven were measures as to the policy instrument environmental policies are most widely applied by the chinese government and regulation control and goal planning instruments are the ones most frequently adopted furthermore the application of supply and demand type policies is inadequate and few effective instruments have been adopted

electricity market design for facilitating the integration of wind energy experience and prospects with the australian national electricity market abstract australia has been an early and enthusiastic adopter of both electricity industry restructuring and market based environmental regulation the australian national electricity market nem was established in 1999 and australia also implemented one of the world s first renewable energy target schemes in 2001 with significant recent growth in wind generation australia provides an interesting case for assessing different approaches to facilitating wind integration into the electricity industry wind project developers in australia must assess both potential energy market and tradeable green certificate income streams when making investments wind farm energy income depends on the match of its uncertain time varying output with the regional half hourly market price a price that exhibits daily weekly and seasonal patterns and considerable uncertainty such price signals assist in driving investments that maximize project value to the electricity industry as a whole including integration costs and benefits for other participants recent nem rule changes will formally integrate wind generation in the market s scheduling processes while a centralized wind forecasting system has also been introduced this paper outlines experience to date with wind integration in the nem describes the evolution of market rules in response and assesses their possible implications for facilitating high future wind penetrations

the value of holding scarce wind resource a cause of overinvestment in wind power capacity in china abstract china s wind power capacity has increased dramatically in recent years but about 30 of the installed capacity sits idle so overinvestment in wind power capacity seems to be a serious problem this paper explores reasons for the overinvestment the economic analysis shows that given uncertain future policy on wind power it is optimal for power companies to invest more than the amount in a certain world a part of the overinvestment has a real value which can be interpreted as the value of holding scarce wind resource this value exists because the wind rich sites with convenient locations to connect to the grids are scarce resource and also because the specific government policies that are essential for promoting wind power are uncertain in the future this value should be taken into account in the investment decision but it results in the phenomenon of overinvestment the concept of the value of holding scarce resource can be generally applied to the resources that are scarce and for which the future policy is uncertain

to what extent does wind power deployment affect vested interests a case study of the northeast china grid abstract china s wind power is in an embarrassing state along with its dramatic development since 2005 its curtailment ratio has been rising although this could be attributed to both physical and institutional factors it is the institutional obstacles mainly resulting from the adjustment difficulties of interests distribution that have exercised a greater impact the stakeholders relating to wind power integration are thermal power companies grid companies and local governments the extent to which wind power deployment affects these vested interests determines the core institutional obstacles to be addressed mainly based on quantitative and case analyses we argue that currently wind deployment in china has a little impact on the interests of thermal companies moderate impact on the interests of grid companies and great impact on local governments we recommend that it is crucial to elevate the role of environmental protection and renewable energy increase while de emphasize the role of economic growth in the evaluation of local governments performance as well as provide incentives for grid companies to attend more to their social responsibilities rather than their scale expansion and revenue growth

electricity market participation of wind farms the success story of the spanish pragmatism abstract in the last 10 years more than 15 gw of wind power asociacion empresarial eolica spanish wind energy association nota de prensa press release 17 de enero de 2008 http www aeeolica org doc np 080117 espana supera los 15000 mw eolicos pdf have been installed in spain of which more than 3 5 gw in 2007 furthermore plans are to reach 20 gw by 2010 and there are expectations of an installed capacity exceeding 40 gw by 2020 this article will present the innovative solutions for technical and economical integration that allow to reach such high level wind penetration objectives the system peaks at around 44 gw and is almost isolated it will be described how the regulation has evolved from a pure feed in tariff to a market premium option where technical and economic integration has been a priority today approximately 97 of installed wind capacity accesses the spanish wholesale electricity market market integration has been crucial sending the correct signals to participants to look for the optimum technical solutions technical improvements have come from both wind power producers fault ride through capabilities visibility and controllability of wind power power production forecasting reactive power control and the system operator specific control centre dedicated to renewable energy sources res new security analysis tools gaining technical confidence of wind capabilities

the use of real options approach in energy sector investments abstract energy shortage global warming and climate change led to an increase in the use of alternative sources of energy with renewable energy sources res playing a fundamental role in this new energetic paradigm however the investment costs often constitute a major barrier to their spread use moreover the overall benefits of renewable energy technologies are often not well understood and consequently they are often evaluated to be not as cost effective as traditional technologies from the moment that the energy sector started a deregulation process with a high level of competitiveness and associated increased market uncertainty traditional project evaluation techniques alone became insufficient to properly deal with these additional risk and uncertainty factors the diffusion of the renewable energy technologies is also affected by this feature the way investors evaluate their investments call now for the use of more sophisticated evaluation techniques real options approach can deal with these issues and as so began to be considered and applied for the energy sector decision aid this approach it is now extensively widespread in evaluating investment projects in the energy sector a large set of applications in almost all fields of energy decision making from electricity generation technologies appraisal to policy evaluation is available in the literature however the use of this technique in the field of res is still limited and worth to be analysed this paper addresses this issue a review of the current state of the art in the application of real options approach to investments in non renewable energy sources and res is presented giving perspectives for further research in this field

foreign aid and the question of fungibility this paper analyzes whether the foreign assistance provided for specific categories of expenditure is shifted among them contrary to the wishes of donors it also considers whether aid reduces the tax effort of recipient governments econometric results are presented for the dominican republic that show that the fungibility of aid has resulted in a thwarting of the intentions of donors an attempt is made to account for the observed differences in behavior of individual countries in altering expenditures copyright 1993 by mit press

finance and the sources of growth the authors evaluate whether the level of development in the banking sector exerts a causal impact on economic growth and its sources total factor productivity growth physical capital accumulation and private saving they use 1 a pure cross country instrumental variable estimator to extract the exogenous component of banking development and 2 a new panel technique that controls for country specific effects and endogeneity they find that banks do exert a large causal impact on total factor productivity growth which feeds through to overall gdp gross domestic product growth the long run links between banking development and both capital growth and private savings are more tenuous

level and dynamics of financial depth consequences for volatility of gdp abstractthe existing literature documents positive but potentially non linear relationship between financial depth measured as private credit to gdp ratio and volatility of gdp in this paper we e