impacts of wind and solar spatial diversification on its market value a case study of the chilean electricity market abstract renewable energy is expected to become the main electricity source in the world in the coming decades with solar and wind power taking a big share of the energy supply although there has been a remarkable advance on renewable energy technologies their integration is still difficult for regulators market designers and system operators due to the high variability and limited predictability of solar and wind resources measures can be adopted to ease their integration among them geographical diversification there is plenty of literature about the diversification of solar and wind resources and there is a common conclusion greater dispersion smooths out power production however literature on the effects of spatial diversification on the power system electricity prices and renewable energy market value is much scarcer this paper studies the effects of spatial diversification and questions whether integration policies are incentivizing the placement of renewable generators where they provide the highest value to the electricity system in chile using real data and a simplified dispatch model the analysis presented shows evidence of the effects of diversification on wind and solar market value in chile results suggest that spatial diversification has a strong positive effect on the market value of renewable energy especially in scenarios with active transmission and hydro storage constraints wind market value may vary up to us 10 mw h depending on the level of diversification and the spatial and temporal constraints of the system and given current storage capacity of hydro reservoirs the solar market value may increase us 5 mw h due to diversification if transmission capacity is enough even though these results must be observed with caution because they depend on the assumptions made there is an important effect of renewable spatial diversification that should be observed by regulators

how accurate are forecasts of costs of energy a methodological contribution forecasts of the cost of energy are typically presented as point estimates however forecasts are seldom accurate which makes it important to understand the uncertainty around these point estimates the scale of the differences between forecasts and outturns i e contemporary estimates of costs may have important implications for government decisions on the appropriate form and level of support modelling energy scenarios or industry investment appraisal this paper proposes a methodology to assess the accuracy of cost forecasts we apply this to levelised costs of energy for different generation technologies due to the availability of comparable forecasts and contemporary estimates however the same methodology could be applied to the components of levelised costs such as capital costs the estimated forecast errors capture the accuracy of previous forecasts and can provide objective bounds to the range around current forecasts for such costs the results from applying this method are illustrated using publicly available data for on and off shore wind nuclear and ccgt technologies revealing the possible scale of forecast errors for these technologies

the dark side of the sun how solar power production affects the market value of solar and gas sources abstract using daily data for the italian wholesale day ahead power market over the period 2008 2013 we assess the impact of solar production on the market value of solar and gas sources defined using the concepts of value factor and unit revenues we find that on average solar generation negatively affects the solar source market value causing a departure from the grid parity condition and mining their competitiveness once public incentives are removed this negative relation is not constant over time and becomes stronger for increasing solar penetration in the energy mix interestingly the opposite is found when looking at gas while the relation between solar production and the gas market value is negative or not significant when the former is low it turns positive for higher levels of solar production this is the result of a change in gas producers bidding strategies indeed in the italian power market the highest hourly price has shifted from the peak daytime when solar production is concentrated to the off peak nighttime when solar is absent from the market and gas can exploit temporary market power

assessing the short term revenue impacts of residential pv systems on electricity customers retailers and network service providers abstract falling costs and supportive government policies have seen remarkable growth in residential photovoltaic systems in jurisdictions around the world while there have been detailed studies of the financial attractiveness of pv for home owners under different policy and retail market arrangements there has been less consideration of the impacts of such systems on some other key industry participants in this paper we undertake an investigation of the annual short term revenue impacts of pv systems for those households installing them for their electricity retailers and network service providers nsps and for all electricity customers more in general in the australian state of nsw we use actual half hourly pv generation and electricity consumption for 80 households in sydney to estimate the real world impacts of a range of former current and possible future pv policy and retail tariff arrangements including gross and net feed in tariffs fit we found that the short term revenue impacts differ significantly for different commercial arrangements and are highly variable and largely driven by the pv performance and its match with household consumption patterns results highlight that current net metering policies in australia with low net fit rates may provide only moderate revenue incentives to households yet quite adverse revenue impacts on nsps and retailers depending on the level of pv export while nsp short term revenue losses will likely involve increasing electricity tariffs in the longer term losses for retailers may add risks to the profitability of household customers with pv the challenge for policy makers is to facilitate socially valuable pv deployment whilst appropriately managing the impacts on all key electricity industry stakeholders

comparing feed in tariff incentives in taiwan and germany abstract the current development of clean energy in taiwan is in the embryonic stage even though in recent times taiwan s development of renewable energy has emphasized wind power and photovoltaic power current statistics show they supply only a small portion of total national power needs and that wind power and solar power are still in development in order to promote the growth of clean energy it is necessary to compare the support mechanisms of developing clean energy in different countries the success of implementing clear energy in germany is often followed by other countries including taiwan thus this paper explores the german experience of implementing a feed in tariff hereafter fit and compared it with the fit system in taiwan to illustrate the differences and similarities between these countries the results could be used as a reference for the future modification of the fit system in taiwan

climate damages in the fund model a disaggregated analysis abstract we examine the treatment of climate damages in the fund model by inserting software switches to turn individual features on and off we obtain fund s estimates for 15 categories of damages and for components of the agricultural category fund as used by the u s government to estimate the social cost of carbon projects a net benefit of climate change in agriculture offset by a slightly larger estimate of all other damages within agriculture there is a large benefit from co 2 fertilization a moderate cost from the effect of temperature on yields and a much smaller impact of the rate of change in fund s agricultural modeling the temperature yield equation comes close to dividing by zero for high probability values of a monte carlo parameter the range of variation of the optimal temperature exceeds physically plausible limits with 95 confidence intervals extending to 17 c above and below current temperatures moreover fund s agricultural estimates are calibrated to research published in 1996 or earlier use of estimates from such models is arguably inappropriate for setting public policy but as long as such models are being used in the policymaking process an update to reflect newer research and correct modeling errors is needed before fund s damage estimates can be relied on

measuring the damages of air pollution in the united states abstract this paper measures the damages due to emissions of air pollution in the united states an integrated assessment model is used to calculate the marginal damage associated with emitting an additional ton of pollution from nearly 10 000 sources in the u s the total damage produced by a source is the marginal damage of an emission its shadow price times the total tons emitted from a specific source adding total damages across all sources yields gross annual damages gad which is a green accounting parallel to gross domestic product gdp gad in 2002 varies between 71 billion and 277 billion 0 7 2 8 of gdp the range of values depends largely on the value of health and the concentration response function relating exposures to fine particulate matter pm 2 5 to adult mortality rates source location also matters urban emissions constitute 52 of total emissions by weight yet they cause nearly three quarters of the gad

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

environmental accounting for pollution in the united states economy this study presents a framework to include environmental externali ties into a system of national accounts the paper estimates the air pollution damages for each industry in the united states an inte grated assessment model quantifies the marginal damages of air pol lution emissions for the us which are multiplied times the quantity of emissions by industry to compute gross damages solid waste com bustion sewage treatment stone quarrying marinas and oil and coal fired power plants have air pollution damages larger than their value added the largest industrial contributor to external costs is coal fired electric generation whose damages range from 0 8 to 5 6 times value added jel e01 l94 q53 q56

the european renewable energy target for 2030 an impact assessment of the electricity sector abstract the european union set binding targets for the reduction of greenhouse gases ghg and the share of renewable energy re in final energy consumption by 2020 the european council agreed to continue with this strategy through to 2030 by setting a re target of 27 in addition to a ghg reduction target of 40 we provide a detailed sectoral impact assessment by analyzing the implications for the electricity sector in terms of economic costs and the regional distribution of investments and shares of electricity generated from renewable energy sources res e according to the impact analysis by the european commission the 27 re target corresponds to a res e share of 49 our model based sensitivity analysis on underlying technological and institutional assumptions shows that the cost effective res e share varies between 43 and 56 secondly we quantify the economic costs of these variants and those which would be incurred with higher shares the long term additional costs for higher res e shares would be less than 1 of total system costs the third aspect relates to the regional distribution of eu wide efforts for upscaling renewables we point out that delivering high res e shares in a cost effective manner involves considerably different efforts by the member states

climate damages in the fund model a comment in a recent paper published in this journal ackerman and munitz 2012 ackerman and munitz am present a sectoral decomposition of the impacts of climate change as represented in fund an integrated assessmentmodel and contrast the resultswith andwithout uncertainty we welcome outside scrutiny of our work even if in this case it adds little to what we knew already anthoff and tol 2011 anthoff et al 2011 am also take issue with the range of uncertainty about the impacts of climate change reported in the peer reviewed literature an issue that is outside our control am further claim that the equation describing the impacts of climate change on agriculture comes dangerously close to dividing by zero and that the fund estimate of the social cost of carbon is significantly affected by these runs this claim is incorrect based on inconclusive diagnostic tests used by am am report two tests for dividing by zero in both tests am change the statistical properties of the monte carlo analysis and compare the expectation of the social cost of carbon from their modified version of fund with estimates from the original model in the original model there are 16 composite distributions that are normal normal normal and 16 that are normal normal in one test am replace these probability density functions with normal distributions in the other test they replace 16 probability density functions with normal distributions and 16 others with normal normal distributions although they preserve the modes of the distributions at least in the first test am change the means all higher moments and all cross moments

revenue prospects of photovoltaic in germany influence opportunities by variation of the plant orientation abstract the fixed feed in tariff under the renewable energy sources act in germany particularly encourages photovoltaic systems with the highest possible annual yield regardless of their temporal generation profile consequently a large part of the installed photovoltaic systems in germany have a southern orientation this paper examines how the optional german market premium scheme incentivizes the installation of photovoltaic systems with a more demand oriented electricity production for this purpose the measure energy yield elasticity of market value was developed and calculated by using historical market data the results show that some of the plant orientations that are deviating from the southern reference could have led to an increase in the market value in the last few years however these would not have been high enough to more than compensate for the financial losses that were formed as a result of the annual energy yield declines the merit order effect could change this situation in the future

two price zones for the german electricity market market implications and distributional effects abstract we discuss the implications of two price zones i e one northern and one southern bidding area on the german electricity market in the northern zone continuous increases in capacity with low variable costs cause large regional supply surpluses in the market dispatch while in the southern zone conventional capacity decreases as the spatial imbalance of supply and load is increasing the current single bidding area more often results in technically infeasible market results requiring curative congestion management measures there is an ongoing discussion about the potential effects of introducing bidding zones in germany this paper applies an electricity sector model with network representation to analyze the system implications and the distributional effects of two bidding zones in the german electricity system in 2012 and 2015 results show a modest decrease in cross zonal re dispatch levels particularly in 2015 however overall network congestion and re dispatch levels increase in 2015 and also remain on a high level for two bidding zones results are very sensitive to more than two bidding zones and additional line investments illustrating the challenge to define stable price zones in a dynamic setting with two bidding areas prices in the model results increase in the southern zone and decrease in the northern zone the average price deviation grows from 0 4eur mwh in 2012 to 1 7eur mwh in 2015 with absolute values being significantly higher in hours when price differences occur stakeholders within zones are exposed to the price deviations to a different extent distributional effects are surprisingly small compared to the wholesale price or different network charges

cycles in nonrenewable resource prices with pollution and learning by doing we study how environmental regulation in the form of a cap on aggregate emissions from a fossil fuel e g coal interacts with the arrival of a clean substitute e g solar energy the cost of the substitute is assumed to decrease with cumulative use because of learning by doing we show that optimal energy prices may initially increase because of pollution regulation but fall due to learning and rise again because of scarcity of the resource finally falling after transition to the clean substitute thus nonrenewable resource prices may exhibit cyclical behavior even in a purely deterministic setting

emissions reduction and economic implications of renewable energy market penetration of power generation for residential consumption in the mena region this paper examines the implications of renewable energy re deployment in power generation for residential consumption in the middle east and north africa mena region under various re penetration targets a comparative assessment revealed a great heterogeneity among countries with turkey dominating as the highest emitter at the sub regional level the middle east sub region contributes more than double the ghg emissions estimated for the gulf and north africa sub regions with all sub regions achieving reductions in the range of 6 38 depending on the re target penetration and promising up to 54 savings on investment excluding positive externalities associated with the offset of greenhouse gas ghg emissions savings

the u s investment tax credit for solar energy alternatives to the anticipated 2017 step down abstract solar photovoltaic pv installations in the united states have been deployed at a rapid pace in recent years a development that is attributed in significant part to the federal investment tax credit itc yet this credit is scheduled to step down from 30 to 10 at the beginning of 2017 for corporate investors for a sample of five u s states and different segments of the solar industry we find that the anticipated itc step down in 2017 would increase the levelized cost of solar power by a significant margin raising the specter of a cliff for the solar industry our analysis identifies and evaluates an alternative phase down scenario that would reduce the itc gradually over time and eliminate it completely by 2024 for this alternative phase down scenario it is shown that solar pv would remain broadly competitive provided the solar industry can maintain the pace of cost reductions demonstrated in past years

accounting for local impacts of photovoltaic farms the application of two stated preferences approaches to a case study in portugal abstract renewable energy sources for electricity generation are unequivocally more environmentally friendly than the traditional sources but are not impact free given the potential for solar photovoltaic energy to contribute to the energy mix in some countries it is timely to carefully consider the potential environmental costs of operation of photovoltaic farms which are experienced by the local population while the general benefits accrue to all we apply the contingent valuation method to a sample of local residents close to three selected photovoltaic farms in portugal also we design a discrete choice experiment to elicit the valuation of specific adverse impacts of electricity generation through photovoltaic energy by national residents our results show that the value elicited in the vicinity of the photovoltaic farms is non negligible on the other hand national residents ponder the trade offs implied by the choice sets and value positively the different adverse local impacts both of these estimates in conjunction or independently can be used to fully account for this often neglected cost of solar energy furthermore we argue that when studying the public acceptance of renewables using stated preference methods explicitly presents the trade offs between negative impacts and costs contributing to more realistic portrayal of public opinion

economic and technical challenges of flexible operations under large scale variable renewable deployment abstract fundamental characteristics of solar and wind power have generated controversy about their economic competitiveness and appropriate techniques for assessing their value this research presents an approach to quantify the economic value of variable renewable capacity and demonstrates its dependence on renewable deployment levels regional resource endowments fleet flexibility and trade assumptions it assesses economic and technical impacts of large scale renewable penetration by linking two models representing electric sector investments and detailed operations model results for california and texas suggest that operational constraints and costs of dispatchable generators e g minimum load levels ramping limits startup costs can impact renewable integration costs but the temporal and spatial variability of solar and wind are larger determinants of their value restrictions on transmission and regional coordination in capacity planning and dispatch decrease the economic value of variable renewable energy highlighting the potential roles of market design and trade energy storage is shown to be a valuable balancing asset at higher solar and wind penetration levels but potential revenues diminish with increased storage deployment

residential energy efficiency and distributed generation natural partners or competition abstract residential energy efficiency and distributed generation seem to be natural partners in our journey towards a more sustainable energy future a growing range of energy efficient consumer technologies and extraordinary declines in photovoltaics system prices has seen household electricity demand fall whilst a growing proportion of the remaining load is provided by household self generation australia is a particularly interesting example of these developments with around 15 of households now possessing a pv system while per capita household demand has also fallen markedly however existing retail electricity tariffs and regulatory arrangements can create mixed incentives for households contemplating both pv and energy efficiency options and for their network service providers this is certainly the case in australia with net metering arrangements that value self consumption of pv far more than pv exports to the grid there are also complex benefits for the electricity network created by these household energy resources that can be significant in this paper we use real household load and pv data from sydney households to model the potential implications of existing electricity tariff arrangements on the financial attractiveness of pv and energy efficiency we model these options separately and in combination for both households implementing these options and their network service providers our results highlight how inappropriate tariffs may well adversely impact on the value that the combination of energy efficiency and pv offers not only to households but also to their network service providers and suggest ways that such impacts might be ameliorated by acknowledging the benefits that these resources can offer to the electricity network

the price elasticity of electricity demand in south australia abstract in this paper the price elasticity of electricity demand representing the sensitivity of customer demand to the price of electricity has been estimated for south australia we first undertake a review of the scholarly literature regarding electricity price elasticity for different regions and systems then we perform an empirical evaluation of the historic south australian price elasticity focussing on the relationship between price and demand quantiles at each half hour of the day this work attempts to determine whether there is any variation in price sensitivity with the time of day or quantile and to estimate the form of any relationships that might exist in south australia

efficient pricing and investment in electricity markets with intermittent resources facing growing technological and environmental challenges the electricity industry needs effective pricing mechanism to promote efficient risk management and investment decisions in a restructured electricity market with competitive wholesale prices and traditionally regulated retail rates however there are technical and institutional barriers that prevent dynamic pricing with price responsive demand in regions with limited energy storage capacity intermittent renewable resources present special challenges this could adversely affect the effectiveness of public policies causing inefficient investments in energy technologies in this paper we present an updated economic model of pricing and investment in restructured electricity market and use the model in a simulation study for an initial assessment of renewable energy strategy and alternative pricing mechanisms a key objective of the study is to shed light on the policy issues so that effective decisions can be made to improve efficiency

strategies against shocks in power systems an analysis for the case of europe abstract electricity systems are constantly exposed to geopolitical techno economic and natural uncertainties that may endanger security of supply therefore it is crucial that policy makers concerned about it consider a variety of possible futures and not only the one that is perceived as the most likely in particular they should account for the possibility of sudden shocks in their decisions with the goal of making the system more robust however long term power system models which are an important pillar of policy decision making are typically designed to determine the cost minimal power system for a specific expected future such a system is not necessarily the most robust one by combining the classic investment optimization approach with the tools of robust decision making we analyze the viability of different strategies that may potentially increase the robustness of a power system for the case of the european power system we pursue a dedicated analysis with the european power system model limes eu based on a total of more than 40 000 model runs we find that strategies promoting the ability of countries to always produce at least 95 of their electricity demand domestically significantly help to reduce the loss of load in case of shocks such a strategy is not cost optimal for the expected future without shocks but the additional costs about 0 1 of total system costs are low compared to the benefits of significantly increasing the power system s robustness

monetary valuation of the social cost of co2 emissions a critical survey an expanding branch of research has estimated the potential costs of climate change which are often expressed as the social cost of carbon scc or the costs of an additional ton of co2 emissions estimates of the scc can be used by policy makers to evaluate climate change policies and greenhouse gas emission reduction projects by means of cost benefit analyses cbas such analyses are complicated by the wide range of scc values that have been reported in the literature and the large uncertainties involved in estimating the potential economic impacts and related costs of climate change this study presents a critical review of the reported scc estimates by examining some neglected consequences of climate change uncertain and extreme scenarios of climate change the discounting of future climate change effects the treatment of individual risk aversion and assumptions about social welfare in view of the many uncertainties and omissions in conventional cost benefit analyses of climate impacts and the scc alternative approaches to decision making should be considered for climate policy

promoting clean energy investment an empirical analysis of property assessed clean energy abstract from 2008 to 2010 a handful of property assessed clean energy pace programs offered property secured loans to homeowners for residential clean energy investments this analysis uses difference in differences models and synthetic counterfactual models to estimate the effect of three california pace programs on residential photovoltaic installations while pace programs do not offer superior terms to other solar financing options we find that pace financing increases solar installations by approximately 3 8 watts per owner occupied household per quarter a 108 increase over the mean watts per owner occupied household

the effects of macroeconomic stability on foreign trade an analysis for spain 1986 2000 two main factors underlie the rebirth of interest in the study of the influence of the real exchange rate on trade the reduction of its volatility and the current trend towards price stability the objective of this study is to analyse the effects of the process of nominal convergence required of the european member states for the fulfilment of monetary integration on foreign trade flows the case of spain which is especially interesting in this context is studied for the period 1986 to 2000 the results of estimating the aggregate functions of the export and import of goods shows how macroeconomic stability has altered the behaviour of trade with respect to the two basic determinants income and prices how it has caused a significant structural change in the real exchange rate and finally how it has laid the explanatory bases for transactions in the twenty first century with the single currency the euro

the economics of renewable energy support abstract this paper uses theoretical and numerical economic equilibrium models to examine optimal renewable energy re support policies for wind and solar resources in the presence of a carbon externality associated with the use of fossil fuels we emphasize three main issues for policy design the heterogeneity of intermittent natural resources budget neutral financing rules and incentives for carbon mitigation we find that differentiated subsidies for wind and solar while being optimal only yield negligible efficiency gains policies with smart financing of re subsidies which either relax budget neutrality or use polluter pays financing in the context of budget neutral schemes can however approximate socially optimal outcomes our analysis suggests that optimally designed re support policies do not necessarily have to be viewed as a costly second best option when carbon pricing is unavailable

solar pv where the sun doesn t shine estimating the economic impacts of support schemes for residential pv with detailed net demand profiling abstract countries with low irradiation and solar pv adoption rates are increasingly considering policy support for solar pv although consumer electricity demand and solar generation profiles are often mismatched this paper presents a methodology for policymakers in such conditions to examine more precisely the financial performance of residential solar pv from the consumer perspective as part of an ex ante policy assessment we model a range of prospective policy scenarios and compare policy mechanisms that compensate homeowners for generation those that reduce their upfront costs and those that assist with financing using ireland as a case study the results confirm the intuitive notion that more generous financial remuneration schemes provide quicker payback however we observe that in low irradiance regions there is little difference between upfront grants and feed in tariffs to accelerate payback timeframes we also show the importance of retail tariff structure in consumer payback for solar pv systems with one part tariffs generating shorter paybacks than two part tariff structures although the latter is more likely to secure revenue for electricity infrastructure investment drawing from this analysis the paper proposes some options for the design of policy supports and tariff structures to deliver a sustainable residential renewable electricity system in low irradiance regions

levelized cost of energy from private and social perspectives the case of improved alkaline water electrolysis abstract the concept of the levelized cost of energy or respectively hydrogen lch is frequently chosen for techno economic analyses of energy technologies however the results of the lch very much depend on the assessment perspective which may be either private or synonymously business or social the paper identifies three points as being basically responsible for differences 1 tax deductibility of cost components 2 external environmental costs and 3 discounting the objectives of the paper are to present the levelized cost of hydrogen for improved alkaline water electrolysis awe and to highlight the different results from private and social perspectives accordingly the methodology comprises the different lch calculation schemes an energy scenario focusing on electricity a life cycle assessment for environmental impacts of awe technology and the monetary valuation of these impacts as a case study we chose the production of hydrogen from advanced alkaline water electrolysis at three different sites in europe germany austria and spain the paper shows that the private and social lch differ strongly inclusion of all cost components and comparatively low discount rates provoke highest lch from social perspective the main differences in the case study presented here are due to full accounting for environmental costs with the global warming potential resulting from electricity generation as the main environmental cost source and due to electricity price projections finally the paper also discusses the sensitivity of lchs with respect to parameters such as plant lifetime monetary values of co2 and tax rates

future wind and solar power market values in germany evidence of spatial and technological dependencies abstract achieving ambitious climate targets entails an extensive utilisation of renewable energy sources however due to weather dependent fluctuations generation from variable renewable energy vre sources is characterised by significantly lower market values in comparison to conventional technologies reinforced by a decline in electricity prices this development poses interesting questions as to its drivers and to what extent market values of wind and solar power can be influenced by the design of electricity markets against this background a scenario based analysis is conducted to trace the future development of market values using endogenously derived electricity prices considering different regional and technological vre diversification strategies and investments into vre technologies on a myopic basis the results show a continued decline in market values with increasing regional discrepancies indicating a growing importance of interregional interdependencies for assessing the profitability of vre furthermore from a system point of view a more distributed allocation of onshore wind capacities to contend with declining market values does not always prove to stabilise market values by facilitating a more constant feed in pattern contrary to expectation finally replacing onshore with offshore wind energy appears to be beneficial as it can lead to an overall increase in the market values of offshore onshore as well as pv generation technologies compared to other mitigation strategies this result raise interesting questions about the systemic economic value of offshore wind despite its higher lcoe in the context of market integration of vre

electric sector policy technological change and u s emissions reductions goals results from the emf 32 model intercomparison project the energy modeling forum emf 32 study compares a range of coordinated scenarios to explore implications of u s climate policy options and technological change on the electric power sector harmonized policy scenarios including mass based emissions limits and various power sector only carbon tax trajectories across 16 models provide comparative assessments of potential impacts on electric sector investment and generation outcomes emissions reductions and economic implications this paper compares results across these policy alternatives including a variety of technological and natural gas price assumptions and summarizes robust findings and areas of disagreement across participating models under a wide range of policy technology and market assumptions model results suggest that future coal generation will decline relative to current levels while generation from natural gas wind and solar will increase though the pace and extent of these changes vary by policy scenario technological assumptions region and model climate policies can amplify trends already under way and make them less susceptible to future market changes the model results provide useful insights to a range of stakeholders but future research focused on intersectoral linkages in emission reductions e g the role of electrification effects of energy storage and better coverage of bioenergy with carbon capture and storage beccs can improve insights even further

impacts of variable renewable energy on wholesale markets and generating assets in the united states a review of expectations and evidence abstract we synthesize available literature data and analysis on the degree to which growth in variable renewable energy vre has impacted or might in the future impact bulk power system assets pricing and costs in the united states most studies of future scenarios indicate that vre reduces wholesale energy prices and capacity factors of thermal generators traditional baseload generators are more exposed to these changing market conditions than low capital cost and more flexible intermediate and peak load generators from analysis of historical data we find that vre is already influencing the bulk power market through changes in temporal and geographic patterns areas with higher levels of vre the most significant observed impacts have concentrated in areas with significant vre and or nuclear generation along with limited transmission with negative pricing also often occurring during periods with lower system wide load so far however vre has had a relatively modest impact on historical average annual wholesale prices across entire market regions at least in comparison to other drivers the reduction of natural gas prices is the primary contributor to the decline in wholesale prices since 2008 similarly vre impacts on thermal plant retirements have been limited and there is little relationship between the location of recent retirements and vre penetration levels although impacts on wholesale prices have been modest so far impacts of vre on the electricity market will be more significant under higher vre penetrations

where do all the windmills go influence of the institutional setting on the spatial distribution of renewable energy installation abstract promoting renewable energy sources is one policy response to climate change not only is there currently a debate over the best policy instrument it is also discussed whether the renewable energy production should be expanded centralized at locations with the highest production potential or decentralized close to load it is yet not fully understood what influences the spatial distribution of renewable energy installation i assess the effect of subsidy scheme and market design on the spatial distribution of wind energy installations by comparing a feed in tariffs versus market premiums and b uniform versus nodal pricing the analysis is based on theoretical considerations and using a six node test model that reflects the consumption and renewable resource distribution in several countries and regions the institutional setting has great influence on the spatial distribution and resulting system costs with uniform pricing a market premium only leads to a more decentralized expansion of renewable energy production than a tariff when sites share similar wind conditions spatially more distributed expansion of wind power performs better in terms of total costs and share of wind power in final demand when networks are restricted

on the economics of renewable energy sources abstract with the global expansion of renewable energy re technologies the provision of optimal re policy packages becomes an important task we review pivotal aspects regarding the economics of renewables that are relevant to the design of an optimal re policy many of which are to date unresolved we do so from three interrelated perspectives that a meaningful public policy framework for inquiry must take into account first we explore different social objectives justifying the deployment of re technologies and review model based estimates of the economic potential of re technologies i e their socially optimal deployment level second we address pivotal market failures that arise in the course of implementing the economic potential of re sources in decentralized markets third we discuss multiple policy instruments curing these market failures our framework reveals the requirements for an assessment of the relevant options for real world decision makers in the field of re policies this review makes it clear that there are remaining white areas on the knowledge map concerning consistent and socially optimal re policies

the demand for tourism in north east england with special reference to northumbria an empirical analysis abstract this paper examines the trends of tourism in north east england in particular we focus on the area of northumbria to show the potential of tourism for economic development in the region within this analysis we concentrate on the demand for tourism in the region and in particular we are concerned with tourism by uk residents in northumbria domestic tourism the long run relationship between domestic tourism demand and a number of economic factors effecting this demand is considered using the johansen and juselius 1990 1992 multivariate cointegration analysis an error correction model is then proposed for short run forecasting of domestic demand for tourism in northumbria

cvar constrained planning of renewable generation with consideration of system inertial response reserve services and demand participation abstract integration of renewable generation can lead to both diversification of energy sources which can improve the overall economic performance of the power sector and cost increase due to the need for further resources to provide flexibility and thus secure operation from unpredictable variable and asynchronous generation in this context we propose a cost risk model that can properly plan generation and determine efficient technology portfolios through balancing the benefits of energy source diversification and cost of security of supply through the provision of various generation frequency control and demand side services including preservation of system inertia levels we do so through a scenario based cost minimization framework where the conditional value at risk cvar associated with costs under extreme scenarios of fossil fuel prices combined with hydrological inflows is constrained the model can tackle problems with large data sets e g 8760 hours and 1000 scenarios since we use linear programming and propose a benders based method adapted to deal with cvar constraints in the master problem through several analyses including the chilean main electricity system we demonstrate the effects of renewables on hedging both fossil fuel and hydrological risks effects of security of supply on costs risks and renewable investment and the importance of demand side services in limiting risk exposure of generation portfolios through encouraging risk mitigating renewable generation investment

climate policy and power producers the distribution of pain and gain abstract climate policies do not affect all power producers equally in this paper we evaluate the supply side distributional consequences of emissions reduction policies using a simple and novel partial equilibrium model where production takes place in technology specific sites in a quantitative application hydro wind and solar firms generate power combining capital and sites which differ in productivity in contrast the productivity levels of coal gas and nuclear technologies are constant across sites we parameterise the model to analyse the effects of stylised tax and subsidy schemes carbon pricing outperforms all other instruments and crucially leads to more equitable outcomes on the supply side technology specific and uniform subsidies to carbon free producers result in a greater welfare cost and their supply side distributional impacts depend on how they are financed power consumption taxes have exceptionally high welfare costs and should not be the instrument of choice to reduce emissions or to finance subsidies aiming to reduce emissions

on representation of temporal variability in electricity capacity planning models abstract this paper systematically investigates how to represent intra annual temporal variability in models of optimum electricity capacity investment inappropriate aggregation of temporal resolution can introduce substantial error into model outputs and associated economic insight the mechanisms underlying the introduction of this error are shown how many representative periods are needed to fully capture the variability is then investigated for a sample dataset a scenario robust aggregation of hourly 8760 resolution is possible in the order of 10 representative hours when electricity demand is the only source of variability the inclusion of wind and solar supply variability increases the resolution of the robust aggregation to the order of 1000 a similar scale of expansion is shown for representative days and weeks these concepts can be applied to any such temporal dataset providing at the least a benchmark that any other aggregation method can aim to emulate how prior information about peak pricing hours can potentially reduce resolution further is also discussed

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

the effects of government expenditure on imports in the eurozone reconsidered evidence from panel data abstractthis study examines the impact of government expenditure on imports the empirical analysis is based on annual data of the euro area countries for the period 1995 2015 we employ econometric methods that mitigate heterogeneity and cross sectional dependence we provide empirical indications that the components of expenditure have different impact on imports demand the findings of this study indicate that the import context of government expenditure is lower than the import context of others expenditure components finally we find that an increase in government expenditure leads to an increase in imports this implies that ceteris paribus that it can lead to a deterioration of the trade balance

on the efficient market diffusion of intermittent renewable energies abstract capacity costs of renewable energies have been decreasing dramatically and are expected to fall further making them more competitive with fossils building on an analytically tractable peak load pricing model we analyze how intermittency of renewable energies affects the market diffusion that results from these lower costs in particular once renewables have become competitive by attaining the same levelized cost of electricity lcoe as fossils the marginal increase in efficient capacities due to a further cost reduction varies substantially initially it is small then it rises but it falls again once renewable capacities are large enough to satisfy the whole electricity demand at times of high availability if external costs of fossils are internalized by a pigouvian tax then perfect competition leads to efficient investments in renewable and fossil capacities even though we assume that only a subgroup of consumers can adapt their demand to price fluctuations that are caused by the intermittency of renewables moreover fossils receive a capacity payment through the market for their reliability in serving demand of non reactive consumers maximum electricity prices rise with the share of renewables if regulators impose a price cap this initially raises investments in renewables but the effect may reverse if the share of renewables is large

a retrospective analysis of benefits and impacts of u s renewable portfolio standards abstract as states consider revising or developing renewable portfolio standards rps they are evaluating policy costs benefits and other impacts we present the first u s national level assessment of state rps program benefits and impacts focusing on new renewable electricity resources used to meet rps compliance obligations in 2013 in our central case scenario reductions in life cycle greenhouse gas emissions from displaced fossil fuel generated electricity resulted in 2 2 billion of global benefits health and environmental benefits from reductions in criteria air pollutants sulfur dioxide nitrogen oxides and particulate matter 2 5 were even greater estimated at 5 2 billion in the central case further benefits accrued in the form of reductions in water withdrawals and consumption for power generation finally although best considered resource transfers rather than net societal benefits new renewable electricity generation used for rps compliance in 2013 also supported nearly 200 000 u s based gross jobs and reduced wholesale electricity prices and natural gas prices saving consumers a combined 1 3 4 9 billion in total the estimated benefits and impacts well exceed previous estimates of rps compliance costs

a capacity investment model of wind power with uncertain supply price under high penetration rate abstract with the rapid development of renewable energy the proportion of wind power in power supply has grown significantly also it influences the power price fluctuation since the marginal cost of wind power is almost zero the growth of wind power s penetration rate has led to a crowding out effect and challenged traditional power generation technology substantially reducing the power price in the market in perfect competition market the real time balance between supply and demand of power is regulated by the real time power price fluctuation so this paper models the intermittence of wind power as uncertain supply and develops a capacity investment model under the uncertainties of both supply and demand we introduce priority dispatch elasticity to describe the crowding out effect and take the power price to be endogenous in order to model the situation of high penetration rate we compare the optimal wind power capacity decision under the strategy of priority grid connection and abandoned power management our results show that optimal capacity investment is inversely related to priority dispatch elasticity under both strategies however the profit from power generation is always higher when adopting the abandoned power management strategy

the private and public economics of renewable electricity generation generating electricity from renewable sources is more expensive than conventional approaches but reduces pollution externalities analyzing the tradeoff is much more challenging than often presumed because the value of electricity is extremely dependent on the time and location at which it is produced which is not very controllable with some renewables such as wind and solar likewise the pollution benefits from renewable generation depend on what type of generation it displaces which also depends on time and location without incorporating these factors cost benefit analyses of alternatives are likely to be misleading other common arguments for subsidizing renewable power green jobs energy security and driving down fossil energy prices are unlikely to substantially alter the analysis the role of intellectual property spillovers is a strong argument for subsidizing energy science research but less persuasive as an enhancement to the value of installing current renewable energy technologies

cost competitiveness of residential solar pv the impact of net metering restrictions abstract the policy of net metering allows operators of residential and commercial solar pv systems to sell surplus electricity back to their utility at the going retail rate this policy has recently been criticized on the grounds that it provides a subsidy for residential and commercial solar installations a subsidy that is paid for by all ratepayers in response public utility commissions have begun to take up this regulatory issue this paper presents a theoretical and empirical analysis of the effects of net metering restrictions we examine the impact that overage tariffs ot will have on the size of future residential pv investments overage tariffs credit electricity generated by the solar system but not consumed by the household and thus transferred back to the utility at a rate below the going retail electricity rate our calculations focus on three representative locations in the states of california nevada and hawaii we find that if overage electricity is credited at some rate set at or above the levelized cost of electricity lcoe there would be sufficient incentives for investors in residential solar pv to continue in the current mode of solar rooftop installations even though the profitability of these investments might be reduced substantially at the same time we find that the lcoe is a tipping point insofar as overage tariffs set below that level would have a sharply negative effect on the individual size and overall volume of new rooftop installations

identifying barriers to large scale integration of variable renewable electricity into the electricity market a literature review of market design abstract for reaching the 2 c climate target the robust growth of electricity generation from variable renewable energy sources vre in the power sector is expected to continue accommodation of the power system to the variable uncertain and locational dependent outputs of vre causes integration costs integrating vre into a well functioning electricity market can minimize integration costs and drive investments in vre and complementary flexible resources however the electricity market in the european union eu as currently designed seems incapable to deliver this end this paper aims to provide a comprehensive literature review of barriers to the large scale market integration of vre in the eu electricity market design based on the set up of the eu electricity market a framework was developed to incorporate the most pertinent market integration barriers and resulting market inefficiencies this paper concludes that an overhaul is needed for the current eu electricity market to address all barriers identified firstly a discrete auction intraday market a marginal pricing balancing market a two price imbalance settlement and a nodal pricing locational marginal pricing mechanism seem more promising in limiting integration costs secondly to support business cases of vre and complementary flexible resources in the electricity market a level playing field should be established and the price cap should be lifted up to the value of lost load voll meanwhile to fit vre s market participation a higher time resolution of trading products and later gate closure time in different submarkets would be required lastly feed in support schemes currently widely used for vre investments might be inconsistent with market integration as they increase integration costs and lock vre investments in a subsidy dependent pathway to avoid such lock in further investigation of alternative capacity based support schemes is recommended

variable renewable energy technologies in the turkish electricity market quantile regression analysis of the merit order effect abstract the share of variable renewable energy sources in power supply has increased significantly in many countries however this increase has also created problems in electricity markets while the average day ahead market price has declined in several markets the merit order effect the remuneration mechanisms in some countries have to be revised due to the surge in financial costs yet further research is needed to understand the implications of the merit order effect for remuneration mechanisms thoroughly accordingly this study aims to contribute to the literature through employing a quantile regression model to analyze the merit order effect and discuss its implications for the remuneration mechanism in turkish electricity market model results show significant negative merit order effect for both wind and run of river hydro technologies however this effect varies with respect to demand price level and technology moreover the contribution of these technologies to the total welfare in the turkish electricity market does not favor fixed price payments in conclusion it is recommended that the remuneration mechanism is revised to include the temporal value of variable renewable energy sources and electricity market design should reflect the locational value of variable renewable energy sources in turkey

the market value of variable renewables the effect of solar wind power variability on their relative price this paper provides a comprehensive discussion of the market value of variable renewable energy vre the inherent variability of wind speeds and solar radiation affects the price that vre generators receive on the market market value during windy and sunny times the additional electricity supply reduces the prices because the drop is larger with more installed capacity the market value of vre falls with higher penetration rate this study aims to develop a better understanding on how the market value with penetration and how policies and prices affect the market value quantitative evidence is derived from a review of published studies regression analysis of market data and the calibrated model of the european electricity market emma we find the value of wind power to fall from 110 of the average power price to 50 80 as wind penetration increases from zero to 30 of total electricity consumption for solar power similarly low value levels are reached already at 15 penetration hence competitive large scale renewable deployment will be more difficult to accomplish than as many anticipate

institutional adaptation to cooling water scarcity for thermoelectric power generation under global warming this article studies adaptation of institutional arrangements for water regulation to climate change power plants occasionally need to curtail production during heat waves causing economic losses and putting power quality at risk to avoid exacerbation of this problem due to climate change the regulation of heat emissions from power plants may require adaptation the analysis abstracts a mathematical model from a case study of the german rhine catchment the model compares three options for regulation with an analysis of transaction costs and balances them with costs from environmental externalities first long term and site specific temperature caps lead to the comparatively lowest sum of social transaction and production costs if heat waves only increase in intensity second a dynamic heat load plan performs better if heat waves only increase in frequency third if both intensity and frequency of heat waves increase substantially a specific contract between the environmental regulator and electricity producers the minimum power plant concept performs comparatively best the article highlights economies of scale in transaction costs and shows how institutional adaptation can depend on the speed of climate change

carbon abatement with renewables evaluating wind and solar subsidies in germany and spain abstract this paper exploits the exogeneity of weather conditions to evaluate renewable energy re subsidies in germany and spain in terms of their short run direct program costs for reducing carbon dioxide emissions we find that both aggregate costs and their distribution between energy producers and consumers vary significantly depending on which type of re technology is promoted reflecting substantial heterogeneity in production costs temporal availability of natural resources and market conditions i e time varying demand carbon intensity of installed production capacities and opportunities for cross border trade we estimate that the costs for reducing 1 ton of co2 through subsidies for solar are 411 to 1944 subsidizing wind entails significantly lower costs ranging from 82 to276 in the short run the economic rents for energy producers always decrease while consumers incur four to seven times larger costs when solar is promoted but gain under re policies promoting wind

the impact of heat waves on electricity spot markets abstract thermoelectric power plants depend on cooling water drawn from water bodies low river run off and or high water temperatures limit a plant s production capacity this problem may intensify with climate change our study quantifies the impact of forced capacity reductions on market prices production costs consumer and producer surplus as well as emissions by means of a bottom up power generation system model first we simulate the german electricity spot market during the heat wave of 2006 then we conduct a sensitivity study that accounts for future climatic and technological conditions we find an average price increase of 11 during the heat wave 2006 which is even more pronounced during times of peak demand production costs accumulate to an additional but moderate 16 m due to the price increase producers gain from the heat wave whereas consumers disproportionately bear the costs carbon emissions in the german electricity sector increase during the heat wave the price and cost effects are more pronounced and increase significantly if assumptions on heat sensitive demand hydropower capacity net exports and capacity reductions are tightened these are potential additional effects of climate change hence if mitigation fails or is postponed globally the impacts on the current energy system are very likely to rise increases in feed in from renewable resources and demand side management can counter the effects to a considerable degree countries with a shift toward a renewable energy supply can be expected to be much less susceptible to cooling water scarcity than those with a high share of nuclear and coal fired power plants

green growth degrowth and the commons the concepts of green growth and degrowth occupy central positions in the public debate on the relationship between economic growth and the environment while proponents of the former approach claim that environmental measures can promote growth by for example more efficient use of natural resources proponents of the latter maintain that environmental integrity can only be upheld by slowing down growth this paper argues that both approaches constitute inadequate foundations for public policy as they fail to appropriately conceptualize social welfare we show how policy aimed at social welfare can be understood as managing a portfolio of capital stocks some of which exhibit the characteristics of commons i e common pool resources and public goods we then propose a programme of welfare diagnostics which aims at establishing minimum thresholds for capital stocks essential to welfare as a guide for real world policy formulation and discuss the role of appropriation of natural resource rents for its practical implementation we conclude by highlighting the central role of scientific policy advice in determining how different conceptions of welfare would be reflected in setting targets and choosing the means to achieve them

do national level policies to promote low carbon technology deployment pay off for the investor countries abstract national level policies to promote deployment of low carbon technologies have been suggested and used as a means to reduce greenhouse gas emissions in the context of international climate change mitigation the long term benefits of such policies in the context of international climate change mitigation depend on their effects on near term emissions abatement and resultant long term technological change that will reduce abatement costs of achieving global mitigation goals there is also an argument that these policies might foster early mover advantages in international low carbon technology markets we first review the factors that could influence such benefits and use a global integrated assessment model to present an illustrative example to understand the potential magnitude of these benefits we find that reductions in long term abatement costs might not provide sufficient incentives to justify policies to promote the deployment of low carbon technologies in particular the emerging higher risk and currently expensive alternatives we also find that early mover advantages can potentially provide substantial benefits but only if these advantages are both strong and persistent our results suggest a role for international cooperation in low carbon technology deployment to address the existence of free riding opportunities in the context of global climate change mitigation

do benefits from dynamic tariffing rise welfare effects of real time retail pricing under carbon taxation and variable renewable electricity supply we analyze the gross welfare gains from real time retail pricing in electricity markets where carbon taxation induces investment in variable renewable technologies applying a stylized numerical electricity market model we find a u shaped association between carbon taxation and gross welfare gains the benefits of introducing real time pricing can accordingly be relatively low at relatively high carbon taxes and vice versa the non monotonous change in welfare gains can be explained by corresponding changes in the inefficiency arising from under consumption during low price periods rather than by changes in wholesale price volatility our results may cast doubt on the efficiency of ongoing roll outs of advanced meters in many electricity markets since net benefits might only materialize at relatively high carbon tax levels and renewable supply shares

aggregate imports and expenditure components in the uk an empirical analysis this paper examines the long run relationship between uk aggregate imports and the macroeconomic components of final expenditure using the johansen multivariate cointegration analysis it is found that there are significant differences between the long run elasticities of import demand with respect to the different components of final expenditure over the period 1972 to 1990 an error correction model is proposed for short run forecasting of uk aggregate imports the short run model appears to track the data well

the functional form of the aggregate import demand equation italy 1960 1980 abstract the authors investigate the functional form of the aggregate import demand equation in italy by using the box and cox transformation and a non linear full information maximum likelihood procedure instead of the two step procedure usually followed

time of day pricing and the levelized cost of intermittent power generation abstract an important characteristic of most renewable energy sources is intermittency in their ability to generate electricity yet intermittency is usually ignored in life cycle cost calculations intended to assess the competitiveness of electric power from renewable as opposed to dispatchable energy sources such as fossil fuels this paper demonstrates that for intermittent renewable power sources a traditional life cycle cost calculation should be appended by a correction factor which we term the co variation coefficient it captures any synergies or complementarities between the time varying patterns of electricity generation and pricing we estimate the co variation coefficient for specific settings in the western united states our estimates imply that the benchmark of cost competitiveness for solar photovoltaic pv power is 10 to 15 lower than previous average life cycle cost analyses have suggested in contrast the generation pattern of wind power exhibits complementarities with electricity pricing schedules yielding a cost assessment that is higher than that suggested by traditional calculations for the specific settings we study the corresponding magnitude of the markup is 10 to 15

levelized cost of storage introducing novel metrics the increasing share of variable renewable generation capacity leads to a growing interest in electricity storage technologies and a summarizing cost metric to analyze the economic viability of such electricity storage units for conventional generation technologies the levelized cost of electricity lcoe is a well known metric in the context of electricity storage however such lcoe like metrics are only limitedly applicable as the finite energy storage capacity can limit the charge and discharge scheduling decisions of the storage operator in addition the fuel i e charged electricity and generated electricity i e discharged electricity is one and the same commodity which provides the opportunity to use an adapted levelized cost metric this work analyzes three different levelized cost metrics and their application to electricity storage units used for electric energy arbitrage the strengths and shortcomings of these storage cost metrics are analyzed in order to determine how they can be applied correctly this analysis results in the following recommendations first it is recommended to use a levelized cost metric in combination with an analysis of a representative price profile upon which the storage operator will act this allows a more accurate estimation of the number of charging and discharging hours and the associated charging cost and discharging revenue given the energy storage capacity constraints of the storage unit second when a number of different representative price profiles hence with different charging costs is available it is recommended to use a cost metric which is independent of the charging cost as this single metric can be compared to each price profile thereby facilitating the interpretation of the results the results and conclusions from this work provide a framework on how to use levelized cost metrics in the context of electricity storage such metrics may help policy makers and investors in prioritizing energy storage investment decisions

location matters the impact of renewable power on transmission congestion and emissions abstract many governments offer subsidies for renewable power to reduce greenhouse gas emissions in the power sector however most support schemes for renewable power do not take into account that emissions depend on the location of renewable and conventional power plants within an electricity grid i simulate optimal power flow in a test grid when 4 renewable power plants connect to the grid across 24 potential sites amounting to over 10 000 configurations each configuration is associated with different levels of emissions and renewable power output i find that emission reductions vary by a factor of 7 and that curtailment due to transmission congestion is more likely when renewable power plants are concentrated in an area of the grid with low demand large cost savings could be obtained by allowing subsidies for renewable power to vary across locations according to abatement potential or by replacing subsidies with a price on emissions

clean energy revisiting the challenges of industrial policy abstract large public investments in clean energy technology arguably constitute an industrial policy one rationale points to market failures that have not been corrected by other policies most notably greenhouse gas emissions and dependence on oil another inspiration for clean energy policy reflects economic arguments of the 1980s it suggests strategic government investments would increase u s firms market share of a growing industry and thus help american firms and workers this paper examines the reasoning for clean energy policy and concludes that while a case can be made that subsidizing clean energy might help address market failures the case may be narrower than some assert and turning theory into sound practice is no simple feat an appropriate price on greenhouse gases is an essential precondition to ensuring efficient incentives to develop and deploy cost effective emissions abating technologies however efficient prices alone are unlikely to generate efficient levels of basic research and development by private firms government investments in clean energy are unlikely to produce net increases in employment in the long run in part because pushing home grown technologies at taxpayers expense offers no guarantee that the eventual products ultimately would not be manufactured somewhere else spending on clean energy technologies is not well suited to fiscal stimulus the authors recommend that federal energy spending should invest in technologies with the lowest expected cost of abatement and highest probability of market penetration funding decisions ought to be insulated as much as possible from rent seeking by interest groups purely political distortions and the parochial preferences of legislators

how market design shapes the spatial distribution of power plant curtailment costs abstract when multiple power plants are curtailed at the same time and in the same region electricity system costs rise if transmission lines are congested these costs might be amplified and spatially more concentrated because there are less spatial spill overs we study how such costs and their distribution depend on the market design nodal pricing or uniform pricing we extend the literature on curtailment by considering space and market design and the literature on market design by considering curtailment we expose a dc load flow model for germany to severe correlated curtailment scenarios we find that additional costs are moderate for the simulated week curtailment of 9 3 non renewable capacity reduces welfare by 2 7 uniform pricing with nodal pricing welfare loss can be reduced by 1 5 distributional differences are multiple times larger for nodal pricing producer surplus rises more and costs are spatially more concentrated at the curtailed power plants consumer surplus becomes lower the difference is unlikely to justify changes of the current market design if also wind or photovoltaic feed in is unavailable economic impacts can decrease or increase but remain in the same order of magnitude the spatial electricity system structure matters more than the volume of curtailment

comparing the costs of intermittent and dispatchable electricity generating technologies economic evaluations of alternative electric generating technologies typically rely on comparisons between their expected life cycle production costs per unit of electricity supplied the standard life cycle cost metric utilized is the levelized cost per mwh supplied this paper demonstrates that this metric is inappropriate for comparing intermittent generating technologies like wind and solar with dispatchable generating technologies like nuclear gas combined cycle and coal levelized cost comparisons are a misleading metric for comparing intermittent and dispatchable generating technologies because they fail to take into account differences in the production profiles of intermittent and dispatchable generating technologies and the associated large variations in the market value of the electricity they supply levelized cost comparisons overvalue intermittent generating technologies compared to dispatchable base load generating technologies they also overvalue wind generating technologies compared to solar generating technologies integrating differences in production profiles the associated variations in the market value of the electricity supplied and life cycle costs associated with different generating technologies is necessary to provide meaningful comparisons between them this market based framework also has implications for the appropriate design of procurement auctions created to implement renewable energy procurement mandates the efficient structure of production tax credits for renewable energy and the evaluation of the additional costs of integrating intermittent generation into electric power networks

value of technology in the u s electric power sector impacts of full portfolios and technological change on the costs of meeting decarbonization goals abstract power sector decarbonization is an important pillar of climate mitigation efforts but perspectives differ about the relative competitiveness of generation technologies and how limited portfolio approaches e g where non renewable generation options are prohibited could alter the costs and likelihoods of reaching emissions reduction goals the existing literature on impacts of technological availability and cost on electric sector planning typically use models that do not have sufficient technological spatial and temporal detail to adequately resolve the economic competitiveness of variable renewable energy vis a vis dispatchable generators using a state of the art energy economic model this work examines impacts of technological availability and advanced generation technologies on u s electricity market outcomes across a range of regional market and policy contexts we show that decarbonization costs are 11 76 higher as technological options are removed from consideration incremental compliance costs for a 95 co2 reduction below 2005 levels are roughly twice as high when new nuclear carbon capture equipped units and transmission are not allowed however the economic and technical implications of limited portfolios depend on the market and policy contexts e g costs are higher with stringent targets more extensive end use electrification and lower gas prices and the costs and capabilities of the remaining options the analysis demonstrates how lower temporal and spatial resolution models likely understate the value of technology by omitting key economic and technical features of high variable renewable pathways additionally the analysis quantifies how technological change can lower costs of emissions reductions by 7 73 and how low cost battery storage can provide a hedge against higher costs when technological portfolios are limited