weighing the costs and benefits of state renewables portfolio standards in the united states a comparative analysis of state level policy impact projections abstract state renewables portfolio standards rps have emerged as one of the most important policy drivers of renewable energy capacity expansion in the u s as rps policies have been proposed or adopted in an increasing number of states a growing number of studies have attempted to quantify the potential impacts of these policies focusing primarily on cost impacts but sometimes also estimating macroeconomic risk reduction and environmental effects this article synthesizes and analyzes the results and methodologies of 31 distinct state or utility level rps cost impact analyses completed since 1998 together these studies model proposed or adopted rps policies in 20 different states we highlight the key findings of these studies on the projected costs of state rps policies examine the sensitivity of projected costs to model assumptions evaluate the reasonableness of key input assumptions and suggest possible areas of improvement for future rps analyses we conclude that while there is considerable uncertainty in the study results the majority of the studies project modest cost impacts seventy percent of the state rps cost studies project retail electricity rate increases of no greater than 1 nonetheless there is considerable room for improving the analytic methods and therefore accuracy of these estimates

separability functional form and regulatory policy in models of interfuel substitution abstract counter intuitive results such as positive own price elasticities have been found in some studies of interfuel substitution this paper examines three possible reasons for this problem first including energy materials in petroleum and coal aggregates is found to contribute to incorrect signs second the mathematical properties of the translog function contribute to concavity violations in contrast the linear logit model of cost shares is found to provide more sensible estimates of own price elasticities across alternative model specifications finally natural gas curtailment policies and environmental regulations are found to be significant factors influencing us industrial fuel demand although omission of these factors does not directly contribute to curvature violations

quantification of market performance as a function of system security the tight coupling between market and system operations in the restructured environment requires a thorough understanding of the interdependence between the market performance and the way the power systems are operated in particular we need to go beyond the qualitative characterization and to quantify the dependence of the market performance on the system security such studies are typically not performed in today s regional transmission organization or rto structures in this paper we develop a general approach to quantify the monetary impacts of complying with a specified security criterion when the deployment of appropriate preventive and or corrective security control actions is fully taken into account this approach is deployed in the day ahead electricity markets and is based on the emulation of the way the rto currently operates the market and the grid the latter in compliance with the security criterion the proposed approach has a wide range of applications such as comparative market performance assessments of different security criteria and the cost benefit analysis of network improvements to mitigate the market performance impacts of a set of specified contingencies we illustrate the application of the proposed approach on the large scale iso ne system to quantify the monetary impacts associated with changing from the current security criterion to two other criteria using the actual 2005 day ahead data the historical system model and the bids offers submitted with the actual market clearing methodology these studies capture in a meaningful way the impacts of the changes with respect to the current security criterion an important finding of this study is that the economic efficiency of electricity markets need not decrease when the system is operated under a stricter criterion

on the prevalence of trends in primary commodity prices abstract this paper applies new time series procedures to examine the prebisch singer hypothesis of a secular deterioration in relative primary commodity prices specifically we allow for up to two structural breaks in 24 price series covering the 1900 98 period for the majority of commodities it is shown that the trend is not well represented by a single downward slope but instead by a shifting trend that often changes sign over the sample period unlike some recent work that has also allowed for structural breaks these results provide much less support for the prebisch singer hypothesis

forward contracting and selling price determination for a retailer to procure the electric energy to be sold to its clients a retailer has to face two major difficulties while buying electric energy it must cope with uncertain pool prices or sign forward contracts at higher average prices while selling electricity it should handle the uncertainty of the end user demand and the fact that customers might choose a different retailer if the selling price is not competitive enough we propose a risk constrained stochastic programming framework to decide which forward contracts the retailer should sign and at which price it must sell electricity so that its expected profit is maximized at a given risk level the developed model takes into account the elastic behavior of end users with respect to the selling price offered by the retailer a realistic case study illustrates the methodology proposed

advanced pricing in electrical systems i theory this paper sets forth a comprehensive theory for the real time pricing of electricity that includes selected ancillary services and extends the theory to incorporate constraints on power quality and environment impact that often influence the operation of a power system this paper is part i of a two paper set it sets forth the mathematical development of the extended model for real time pricing the formulation is novel in that it combines the dynamic equations for load frequency control with the static equations of a constrained optimal power flow part ii derives optimal nodal specific real time prices for both real and reactive power the prices derived include additive premia or opportunity costs reflecting the effects of voltage regulation maintenance of generation and transmission reserves regulation of frequency and tie line flows removal and or control of power harmonics and others

scenario reduction for futures market trading in electricity markets to make informed decisions in futures markets of electric energy stochastic programming models are commonly used such models treat stochastic processes via a set of scenarios which are plausible realizations throughout the decision making horizon of the stochastic processes the number of scenarios needed to accurately represent the uncertainty involved is generally large which may render the associated stochastic programming problem intractable hence scenario reduction techniques are needed to trim down the number of scenarios while keeping most of the stochastic information embedded in such scenarios this paper proposes a novel scenario reduction procedure that advantageously compares with existing ones for electricity market problems tackled via two stage stochastic programming

a reexamination of trends in primary commodity prices this paper conducts a reexamination of the prebisch singer hypothesis by employing the unit root test proposed by lee and strazicich 2003 and lee and strazicich 2004 that allow for up to two structural breaks given the higher power of these tests compared to the zivot and andrews 1992 and lumsdaine and papell 1997 tests rejection of the null can be considered as genuine evidence of stationarity the main findings of this paper are that eleven out of twenty four commodity prices are found to be difference stationary implying that shocks to these commodities tend to be permanent in nature the remaining thirteen prices are found to exhibit trend stationary behavior with either one or two structural breaks most of the commodities that do not exhibit difference stationary behavior seem to contain no significant trends there are fewer cases in relation to past studies of commodities that display negative trends thereby weakening the case for the prebisch singer hypothesis

running a more complete market with the slp iv acopf the acopf is at the core of competitive electricity market design it is the only ac based algorithm that simultaneously co optimizes real and reactive power dispatch for steady state operations on ac power systems in practice independent system operators isos oversimplify the physical problem and settle the markets on locational marginal price lmps based on real power but do not price reactive power dispatch or voltage control this work proposes a market dispatch and pricing procedure based on the acopf to provide a more complete pricing mechanism we formulate the dual problem of the slp iv acopf as shown in 1 which is a successive linear program shown to solve the acopf to an acceptable quality of convergence to a best known solution with linear scaling of computational time in proportion to network size therefore the dual problem is also a linear program as a result the marginal value pricing of the optimal solution to the dual problem supports the market dispatch due to strong duality i e this solution technique results in a revenue adequate and more complete market design furthermore we show how to distribute the complete real time market settlements the analysis includes a direct comparison to dcopf based approaches similar to those applied in current iso markets

the impact of lead time on capital investments abstract we study equilibrium investment strategies of firms competing in stochastic dynamic market settings and facing two types of investment structures investment with significant lead time or time to build and investment without or minor lead time we investigate how investment behavior changes when investment is subject to time to build versus when it is not we characterize equilibrium investment strategies under several information structures and compare results to the social optimum we offer some new results the model predicts that controlling for demand and production and investment costs investments and outputs can be higher in progressive industries which often exhibit time to build than in fast paced industries where time to build is insignificant furthermore for both investment types investment with or without time to build we offer a novel equilibrium in which firms incrementally invest this behavior is driven by demand uncertainty and capacity constraints also expected outputs are lower than cournot outputs as firms face uncertainty moreover the amount of uncertainty has different effects over investment types

convexity of the set of feasible injections and revenue adequacy in ftr markets the feasible set of power injections for the constrained power flow equations is nonconvex when practical transmission capacity and bus voltage limits are imposed the projection onto the space of active power injections may be close to convex but this is not sufficient to guarantee revenue adequacy for the settlement of financial transmission rights

the effect of contingency analysis on the nodal prices in the day ahead market we look at the effect of modeling branch outage contingencies on locational marginal prices to model contingencies in the day ahead auction we formulate a two stage stochastic program rather than follow the current practice of including a list of possible contingencies that must be satisfied we incorporate a larger set of contingencies in the model and allow contingencies to result in load reductions outages at a cost the model can be used and interpreted in two ways one is to look at the tradeoff between reliability and outage costs another is to consider the load losses resulting from a contingency to be consumer offers of load reductions in response to line outages as part of the day ahead auction in analyzing the model structure we find that the prices in the model closer in definition to those currently used in the day ahead auction do not maximize expected surplus because the day ahead auction produces prices that assume shortages will never occur this raises issues with the design of auctions with important stochastic elements in the market we present results for a 68 node grid with 86 branches lines and transformers to illustrate how prices and expected values change as the costs of outages are varied

the use of linear logit models for dynamic input demand systems this paper demonstrates that a linear logit model with appropriate constraints can be used to specify a system of cost share equations that satisfy neoclassical economic conditions unlike many other flexible functional forms the logistic function is particularly well suited for incorporating dynamic adjustment mechanisms the empirical results suggest that the use of static models overstates short run own price elasticities and understates the corresponding long run price effects

energy and reserve pricing in security and network constrained electricity markets this paper analyzes some unresolved pricing issues in security constrained electricity markets subject to transmission flow limits although the notion of separate reserve types as proposed by ferc can be precisely and unambiguously defined when transmission constraints are active the very existence of separate reserve prices and markets is open to question when the prices are based on marginal costs instead we submit here that the only products whose marginal costs can be separately and uniquely defined and calculated are those of energy and security at each node thus under marginal pricing at any given network bus all scheduled reserve types should be priced not at separate rates but at a common rate equal to the marginal cost of security at that bus furthermore we argue that nodal or area reserves cannot be prespecified but must be obtained as by products of the market clearing process simulations back up these conclusions

singularity and autoregressive disturbances in linear logit models the implications of including autoregressive disturbances in linear logit models of demand systems are explored it is argued that the normality assumption of the error terms is more appropriate in the linear logit model than in a share equation model with additive disturbances commonly found in the literature autoregressive disturbances and their implications for model estimation are discussed in that context both theoretical arguments and empirical evidence are presented in favor of the logit specification given the presence of serial correlation

spot pricing when lagrange multipliers are not unique classical spot pricing theory is based on multipliers of the primal problem of an optimal market dispatch i e the solution of the dual problem however the dual problem of market dispatch may yield multiple solutions in these circumstances spot pricing or any standard pricing practice based on multipliers cannot generate a unique clearing price although such situations are rare they can cause significant uncertainties and complexities in market dispatch in practice this situation is solved through simple empirical methods which may cause additional operations or biased allocation based on a strict extension of the principles of spot pricing and surplus allocation we propose a new pricing methodology that can yield unique impartial and robust solution the new method has been analyzed and compared with other pricing approaches in accordance with spot pricing theory case studies support the results of the theoretical analysis and further demonstrate that the method performs effectively in both uniform pricing and nodal pricing markets

pricing of electric power under uncertainty information and efficiency schemes for pricing electric power are compared in terms of how well they coordinate the decisions of participants consumers suppliers regulators a scheme is analyzed along two dimensions the aspects of participants private information that the scheme reveals and the efficiency of the allocation the scheme reaches information aspects are studied within the framework of economic mechanism theory allocation efficiency is studied within a stochastic recourse model which takes into account consumer loss due to rationing

decentralized intraday generation scheduling for multiarea power systems via dynamic multiplier based lagrangian relaxation due to day ahead forecast error in load demand and renewable generation there exists inevitable deviation between real time operation and day ahead generation schedules this paper introduces a decentralized multiarea intraday generation scheduling based on nonlinear ac power flow this approach allows for a more reliable and economic operation with the ability to accurately constrain power and voltage securities at a multiarea scale a dynamic multiplier based algorithm is employed for solving the nonlinear multiarea intraday dispatch model which is fully decentralized and thus preserves autonomy for each area the dynamic multiplier based algorithm presents the advantage of accelerated computation compared to conventional static multiplier numerical simulations illustrate the computational performance and practical value of the proposed multiarea intraday generation scheduling framework and dynamic multiplier based algorithm

convergence of volatile power markets with price based demand response price based demand response dr program is a mechanism for encouraging electricity consumers to dynamically manage their energy consumptions in response to time varying electricity prices and thereby reduce peak electricity demands and alleviate the pressure to power systems however it brings additional dynamics and new challenges to the real time supply and demand balance specifically if real time price based dr programs are widely deployed in the future price sensitive dr load levels would constantly change in response to dynamic real time prices which will impact the economic dispatch ed schedule and in turn affect electricity market clearing prices this paper adopts two methods for examining the impacts of different dr price elasticity characteristics and dr participation levels on the convergence of volatile power market a closed loop iterative simulation method and a non iterative method based on the contraction mapping theorem in this paper convergence refers to the fact that load and or price values will finally converge to a fixed point after a finite number of iterations between the ed problem and the price sensitive dr load adjustment five price sensitive dr performance function categories are used to simulate different nonlinear price elasticity characteristics of dr loads numerical studies illustrate how the convergence status of power markets will be affected by the nonlinear price elasticity dr curves the dr penetration levels and the capacity limits of generating units

a short note on updating the grilli and yang commodity price index the grilli and yang commodity price index is one of the most widely used commodity price series in the applied economics literature this note provides some practical advice on updating this data series by listing the base period index values identifying relevant data sources and describing a method for computing subindex weights in 1988 enzo grilli and maw cheng yang published their seminal article on the long run development of an index of 24 primary commodity prices gycpi deflated by an index of manufactured goods unit values the sample of average annual primary commodity prices covers about 54 percent of the primary commodity trade in the index reference period 1977 79 the deflators considered for manufacturing prices were the u s manufacturing price index usmpi and the manufacturing unit value index muv 1widely used and discussed the grilli and yang data set has been extended by a number of researchers the data have been employed in a variety of contexts in later studies thus the gycpi data continue to enjoy wide popularity in their own right and as a benchmark for new approaches to empirical studies

semi nonparametric estimates of interfuel substitution in u s energy demand abstract this paper focuses on the demand for crude oil natural gas and coal in the united states in the context of two globally flexible functional forms the fourier and the asymptotically ideal model aim estimated subject to full regularity using methods suggested over 20 years ago by gallant and golub gallant a ronald and golub gene h imposing curvature restrictions on flexible functional forms journal of econometrics 26 1984 295 321 and recently used by serletis and shahmoradi serletis a shahmoradi a 2005 semi nonparametric estimates of the demand for money in the united states macroeconomic dynamics 9 542 559 in the monetary demand systems literature we provide a comparison in terms of a full set of elasticities and also a policy perspective using for the first time parameter estimates that are consistent with global regularity

pricing for system security power tariffs security in power systems refers to the ability of the system to withstand imminent disturbances contingencies maintaining security is an issue which must be addressed at the system level it is shown in this paper however that it is possible to maintain power system security in an operating environment with many participants power companies independent power producers co generators consumers each attempting to optimize their own benefit through pricing incentives and appropriate information exchange rates for power generation consumption and for an offer to use during a contingency as well as information on the probability distribution of contingency need for each participant are derived so that individual optimization will lead to the socially optimal solution in which power system security is optimized and the aggregate benefit is maximized

optimization based approach for price multiplicity in network constrained electricity markets this paper addresses the problem of price multiplicity in network constrained pool based electricity markets under marginal pricing this problem consists in the existence of multiple vectors of locational marginal prices for the same optimal market clearing dispatch solution as a consequence delicate conflicts of interest may arise among market participants price multiplicity may take place even in auction designs based on convex formulations for the market clearing procedure an effective duality based solution approach is proposed in this paper to handle the issue of price multiplicity once the optimal market clearing dispatch is known we propose the subsequent solution of a simple pricing problem in order to determine the vector of locational marginal prices unlike previously reported methodologies the proposed approach presents two salient features 1 it is based on sound mathematical programming and 2 it is computationally inexpensive since it relies on the solution of a linear program numerical results are provided to illustrate the performance of the proposed tool

testing the prebish singer hypothesis using second generation panel data stationarity tests with a break abstract in this paper we test the prebish singer ps hypothesis which states that real commodity prices decline in the long run using two recent powerful panel data stationarity tests accounting for cross sectional dependence and a structural break we find that the hypothesis cannot be rejected for most commodities other than oil

min max regret bidding strategy for thermal generator considering price uncertainty the electricity price volatility brings challenges to bidding strategies in the electricity markets in this paper we propose a minimax regret approach for a market participant to obtain an optimal bidding strategy and the corresponding self scheduled generation plans motivated by recently proposed robust optimization approaches our approach relies on the confidence intervals of price forecasts rather than point estimators we reformulate the minimax regret model as a mixed integer linear program milp and solve it by the benders decomposition algorithm moreover we design a bidding strategy based on the price forecast confidence intervals to generate the offer curve finally we numerically test the minimax regret approach in comparison with the robust optimization approach on three types of thermal generators by using real electricity price data from pjm to verify the effectiveness of our proposed approach

two stage stochastic programming model for market clearing with contingencies planning for contingencies typically results in the use of more expensive facilities before disruptions it leads to different prices and energy availability at various network locations depending on how the contingency analysis is performed in this paper we present a two stage stochastic programming model for incorporating contingencies the model is computationally demanding and made tractable by using an interior point log barrier method coupled with benders decomposition the second stage optimal recourse function rf defines the most economically efficient actions in the post contingency state for returning the system back to normal operating conditions the approach is illustrated with for two examples small with 8 buses 11 branches and ieee medium scale with 300 buses 411 branches

the commodity terms of trade unit roots and nonlinear alternatives a smooth transition approach market price dynamics for north american oriented strand board markets are examined specifically the role of transactions costs are examined vis a vis the law of one price weekly data for the january 3rd 1995 through april 14th 2006 period are used in the analysis nonlinearities induced by unobservable transactions costs are modeled by estimating smooth transition autoregressions stars results indicate that nonlinearity is an important feature of these markets and that the parity relationships implied by economic theory are generally supported by the star models implications for the efficiency of spatial market linkages are examined by estimating generalized impulse response functions

impact of deployment of renewable portfolio standard on the electricity price in the state of illinois and implications on policies abstract the renewable portfolio standard rps of the state of illinois specifies a schedule for the fraction of electricity produced from wind to be phased in through 2025 the price of electricity due to implementation of rps in order to achieve a six year payback on investment on new wind farms was estimated for six scenarios that examined the effect of electricity consumption growth rate production tax credit of 0 022 kw h or unrestricted investment tax credit of 30 and projected changes in installed project costs in all cases the electricity price was found to be dominated by the installed project cost capital cost thus any policy that affects the capital cost directly or indirectly would have a significant effect on the electricity price whereas investment tax credit has a direct effect policies that encourage technology improvement and improve transmission lines would have a similar effect of lowering the capital cost carbon tax on the other hand would increase the electricity price to the consumers although it offers other benefits

incorporating fuel constraints and electricity spot prices into the stochastic unit commitment problem the electric power industry is going through deregulation as a result the load on the generating units of a utility is becoming increasingly unpredictable furthermore electric utilities may need to buy power or sell their production to a power pool that serves as a spot market for electricity these trading activities expose utilities to volatile electricity prices in this paper we present a stochastic model for the unit commitment that incorporates power trading into the picture our model also accounts for fuel constraints and prices that may vary with electricity prices and demand the resulting model is a mixed integer program that is solved using lagrangian relaxation and bender s decomposition using this solution approach we solve problems with 729 demand scenarios on a single processor to within 0 1 of the optimal solution in less than 10 minutes our numerical results indicate that significant savings can be achieved when the spot market is entered into the problem and when stochastic policy is adopted instead of a deterministic one

segmented trends and non stationary time series since the influential work of charles r nelson and charles plosser 1982 many empirical studies have concluded that macroeconomic time series are difference stationary this paper proposes the segmented trend model as an alternative in which the series is the sum of a nonstationary trend and a stationary cycle and where the trend shows infrequent shifts the paper proposes tests between the difference stationary and segmented trends models and applies these to the data of nelson and plosser in general the results indicate that prices are difference stationary but quantities follow segmented trend processes copyright 1989 by royal economic society

locational marginal price sensitivities within an optimal power flow market clearing framework this paper provides expressions to compute the sensitivities of locational marginal prices with respect to power demands sensitivities with respect to other parameters can also be obtained an example and a case study are used to illustrate the expressions derived

a theory of electricity tariff design for optimal operation and investment this study addresses the problem of balancing supply and demand side operation and investment activities existing theory is extended to cover electricity industry models with uncertainty in future conditions and intertemporal linking such as storage and investment an optimal pricing structure which takes these into account is presented it would induce participants suppliers and consumers to make profit maximizing investment and operation decisions which are socially optimal the structure contains two terms a short run marginal cost pricing as well as a new incentive term to account for the interaction of participants at different time points a probabilistic forecast of pricing structures at future time is required a justification of the result and three simple illustrative examples are given

the performance of stochastic dynamic and fixed mix portfolio models the purpose of this paper is to demonstrate how to evaluate stochastic programming models and more specifically to compare two different approaches to asset liability management the first uses multistage stochastic programming while the other is a static approach based on the so called constant rebalancing or fixed mix particular attention is paid to the methodology used for the comparison the two alternatives are tested over a large number of realistic scenarios created by means of simulation we find that due to the ability of the stochastic programming model to adapt to the information in the scenario tree it dominates the fixed mix approach

marginal loss modeling in lmp calculation this paper discusses the pricing of marginal transmission network losses in the locational marginal pricing approach recently deployed in the iso new england iso ne standard market design smd project implemented by alstom s t d energy automation and information eai business the traditional loss model is studied and a new model is proposed the new model achieves more defendable and predictable market clearing results by introducing loss distribution factors to explicitly balance the consumed losses in the lossless dc power system model the distributed market slack reference is also introduced and discussed the lmp components produced by the two models are studied and compared under changes in slack reference numerical examples are presented to further compare the two models

testing for trends in the terms of trade between primary commodities and manufactured goods abstract this paper joins the statistical debate on the terms of trade between primary commodities and manufactured goods by contributing to the methodological discussion and presenting new evidence using data series covering almost the whole of the 20th century using statistical tests that take into account breaks in the series it is found that over the 20th century the relative prices of primary commodities dropped to nearly one third of their level at the beginning of the century in two installments when random shocks led to structural breaks and not in a gradual way as implied by either a deterministic or stochastic trend possible reasons for the structural breaks and their policy implications are discussed

a comprehensive assessment of the evolution of financial transmission rights financial transmission rights ftrs are complementary to the locational marginal pricing of energy the basic aim of the ftr mechanism is to guard forward contracts from uncertain congestion charges ftrs are also useful to individual generators and loads for selling and buying power respectively at the prices of other locations the concept has evolved encompassing many features such as a simultaneous feasibility test various ways to conduct auctions and allocations and secondary trading ftrs also have a close relation to market power and transmission investment this paper reviews most of the landmark research papers on the evolution of the ftr concept it reports a comprehensive assessment of various facets of ftrs and allied issues financial transmission rights and flowgate rights fgrs are compared the concept of long term ftrs is discussed the paper also touches upon future proposals in this area

the effect of demand elasticity on security prices for the poolco and multi lateral contract models optimum power flows and security constrained power flows assume that customer demand is a fixed quantity in the new competitive environment it is necessary to assume that demand is elastic and will vary as a function of price a critical element in any competitive model whether it be a poolco or a multi lateral contract model is for a system operator to ensure reliability and feasibility of the power system operating point security pricing for feasibility was first advanced by schweppe et al for the case of line flow constraints for a poolco model using geometry this paper generalizes the approach to include any security constraint for a general competitive model the paper discusses interpretations of security pricing and its possible implementation in energy management systems

a stochastic programming approach to power portfolio optimization we consider a power portfolio optimization model that is intended as a decision aid for scheduling and hedging dash in the wholesale power market our multiscale model integrates the unit commitment model with financial decision making by including the forwards and spot market activity within the scheduling decision model the methodology is based on a multiscale stochastic programming model that selects portfolio positions that perform well on a variety of scenarios generated through statistical modeling and optimization when compared with several commonly used fixed mix policies our experiments demonstrate that the dash model provides significant advantages

can deployment of renewable energy put downward pressure on natural gas prices abstract high and volatile natural gas prices have increasingly led to calls for investments in renewable energy one line of argument is that deployment of these resources may lead to reductions in the demand for and price of natural gas many recent us based modeling studies have demonstrated that this effect could provide significant consumer savings in this article we evaluate these studies and benchmark their findings against economic theory other modeling results and a limited empirical literature we find that many uncertainties remain regarding the absolute magnitude of this effect and that the reduction in natural gas prices may not represent an increase in aggregate economic wealth nonetheless we conclude that many of the studies of the impact of renewable energy on natural gas prices appear to have represented this effect within reason given current knowledge these studies specifically suggest that a 1 reduction in us natural gas demand could lead to long term average wellhead price reductions of 0 8 2 and that each megawatt hour of renewable energy may benefit natural gas consumers to the tune of at least 7 5 20

interfuel substitution a meta analysis interfuel substitutability has been of longstanding interest to the energy economics and policy community however no quantitative meta analysis has yet been carried out of this literature this paper fills this gap by analyzing a broad sample of studies of interfuel substitution in the industrial sector manufacturing industry or subindustries or macro economy of a variety of developed and developing economies publication bias is controlled for by including the primary study sample size in the meta regression results for the shadow elasticities of substitution between coal oil gas and electricity for forty six primary studies show that at the level of the industrial sector there are easy substitution possibilities between all the fuel pairs with the exception of gas electricity and coal electricity substitution possibilities seem more constrained at the macro level and less constrained in sub industries estimates also vary across countries publication bias does not seem to be present but model and data specification issues very significantly affect the estimates derived by each individual study estimates from cross section regressions are generally largest fixed effects panel estimates intermediate in magnitude and time series estimates are mostly much smaller econometric research suggests that the fixed effects estimates are likely the best among the existing studies though biased downwards

the economic costs of reducing greenhouse gas emissions under a u s national renewable electricity mandate the electricity sector is the largest source of greenhouse gas emissions ghgs in the u s many states have passed and congress has considered renewable portfolio standards rps mandates that specific percentages of electricity be generated from renewable resources we perform a technical and economic assessment and estimate the economic costs and net ghg reductions from a national 25 percent rps by 2025 relative to coal based electricity this policy would reduce ghg emissions by about 670 million metric tons per year 11 percent of 2008 u s emissions the first 100 million metric tons could be abated for less than 36 metric ton however marginal costs climb to 50 for 300 million metric tons and to as much as 70 metric ton to fulfill the rps the total economic costs of such a policy are about 35 billion annually we also examine the cost sensitivity to favorable and unfavorable technology development assumptions we find that a 25 percent rps would likely be an economically efficient method for utilities to substantially reduce ghg emissions only under the favorable scenario these estimates can be compared with other approaches including increased r d funding for renewables or deployment of efficiency and or other low carbon generation technologies

ex post pricing in the co optimized energy and reserve market this paper discusses an alternative to the ex post pricing model currently under development within iso new england s iso ne ancillary service market since iso ne s real time ancillary service market co optimizes both energy and reserve products ex post pricing is needed for both energy and reserve a co optimization approach for ex post pricing requires defining complex pricing rules and implementing heuristics to ensure consistent binding constraints with the ex ante dispatch in order to avoid complexity and uncertainty of required heuristics a new ex post pricing schema is proposed to calculate the ex post energy and reserve prices in a decoupled way while recognizing the coupling effect of energy and reserve in the proposed approach ex post energy prices are first computed by incorporating the ex ante marginal opportunity cost of reserve in the energy offer the ex post reserve prices are then calculated by considering the ex post marginal opportunity cost of energy this approach simplifies the implementation of ex post pricing rules in the iso ne market numerical examples are presented to further demonstrate the validity of this approach

the prebisch singer hypothesis four centuries of evidence we employ a unique data set and new time series techniques to reexamine the existence of trends in relative primary commodity prices the data set comprises 25 commodities and provides a new historical perspective spanning the seventeenth to the twenty first centuries new tests for the trend function robust to the order of integration of the series are applied to the data results show that eleven price series present a significant and downward trend over all or some fraction of the sample period in the very long run a secular deteriorating trend is a relevant phenomenon for a significant proportion of primary commodities 2010 the president and fellows of harvard college and the massachusetts institute of technology

formulation of the russell yasuda kasai financial planning model this paper describes the formulation of the russell yasuda kasai financial planning model including the motivation for the model the presentation complements the discussion of the technical details of the financial modeling process and the managerial impact of its use to help allocate the firm s assets over time discussed in carin o et al 1994 1998 respectively the multistage stochastic linear program incorporates yasuda kasai s asset and liability mix over a five year horizon followed by an infinite horizon steady state end effects period the objective is to maximize expected long run profits less expected penalty costs from constraint violations over the infinite horizon scenarios are used to represent the uncertain parameter distributions the constraints represent the institutional cash flow legal tax and other limitations on the asset and liability mix over time

risk based locational marginal pricing and congestion management this paper develops a new electricity market clearing mechanism called risk based locational marginal pricing rlmp the rlmp is derived from the risk based security constrained economic dispatch model where risk is modeled to capture the system s overall security level compared to the traditional locational marginal pricing lmp which is composed of three components energy congestion and loss the rlmp consists of an additional risk component the risk component is a price signal to reflect the system s overall security level this paper discusses the features of rlmp and analyzes its benefits over traditional lmps the proposed concept and method are illustrated on a six bus system and the wecc 240 bus system

a penalty scheme for reducing electricity price volatility the deregulation of electric power systems in many parts of the world has changed the mechanism of electricity pricing unlike the fixed price in conventional power systems electricity price varies with time and location in the new deregulated environment electricity prices in a restructured power system can be highly volatile due to the random nature of system failures and demands it is therefore very difficult for the independent system operator iso to control the price and associated risk the high prices beyond control have resulted in significant impacts on customers as well as on system operation this paper proposes a penalty scheme for reducing electricity price volatility caused by failures in generation companies gencos or transmission companies transcos in this scheme gencos and transcos will be penalized if their equipment failures result in unexpected price changes the price decomposition technique is used to evaluate the price components caused by random failures the penalty can be calculated based on the difference of electricity price components between the normal state and the contingency states moreover a simplified schema which is based on profit analysis is also proposed in this paper the proposed penalty scheme not only gives the gencos and transcos an incentive to improve their reliabilities but also provides a flexible tool for the iso to control the system price risk the possible shortcomings of the proposed schema are also specified in the paper the ieee rts is analyzed to illustrate the technique

interfuel substitution in the united states in this paper we use the locally flexible translog functional form to investigate the demand for energy and interfuel substitution in the united states and to provide a comparison of our results with most of the existing empirical energy demand literature motivated by the widespread practice of ignoring theoretical regularity we follow barnett s 2002 suggestions and estimate the model subject to theoretical regularity using methods developed by diewert and wales 1987 and ryan and wales 2000 in an attempt to produce inference consistent with neoclassical microeconomic theory moreover we use the most recent data published by the u s energy information administration eia and in addition to investigating interfuel substitution possibilities in total u s energy demand we follow serletis et al 2009 and also examine interfuel substitution possibilities in energy demand by sector moreover we test for weak separability with the objective of discovering the structure of the functional form in total energy demand as well as energy demand by sector

strong formulations for multistage stochastic self scheduling unit commitment with the increasing penetration of renewable energy into the power grid system the volatility of real time electricity prices increases significantly this brings challenges for independent power producers to provide optimal bidding strategies the traditional approaches of only attending the day ahead market might not be profitable enough without taking advantage of real time price volatility in this paper we study the optimal bidding strategies for the independent power producers utilizing self scheduling strategies to participate in the real time market considering real time electricity price volatility with the objective of maximizing the total expected profit considering the correlations of renewable energy generation outputs among different time periods the correlations of real time prices are captured in our modeling framework in which we explore a multistage stochastic scenario tree to formulate the price uncertainties accordingly the derived multistage stochastic self scheduling unit com

pricing energy and reserves using stochastic optimization in an alternative electricity market this paper presents a stochastic linear programming model that can be used for pricing in electrical energy and reserve markets it addresses capacity energy and reserve dispatch problems that may arise from n 1 contingency scenarios possible market solutions focusing on generator compensation using real time day ahead and hybrid schemes are enumerated along with opportunities for consumer pricing and transmission costing this model is illustrated on a 6 bus test system as well as a larger 66 bus system representing the ontario network a key difference among schemes is the degree of risk to the generators measured by variance in profit

prices technology development and the rebound effect abstract energy efficiency is the critical parameter for policies that aim at reducing energy consumption while maintaining or even boosting economic growth the two main options to influence energy efficiency are changes in relative prices i e raising the price of energy through economic instruments or to introduce new technologies which increase the productivity of each unit of energy this paper is based on the notion that in an equilibrium economy the marginal economic productivity is identical for all factors i e energy labour knowledge and capital from this premise two main conclusions can be drawn first any change in price or technology will have an impact on the whole economy by creating feedbacks through the substitution of factors of production and goods as well as increased wealth second the two policy approaches changing relative prices and technology development are not opposite to each other they are the two faces of the same reality and should be developed and promoted simultaneously and consistently

reliability based distribution network pricing as a tool for network operators to recover network investment costs from network users as well as to provide forward looking economic signals distribution network pricing models are also expected to identify and recover investment costs related to maintaining network security the existing models reflect network security by determining the maximum allowed contingency flow along each component through implementing deterministic contingency analysis they fail to consider two reliability cost drivers 1 reliability levels of network components and 2 interruption tolerance levels at different nodes for the first time this paper proposes a novel distribution network pricing model to reflect two key reliability cost drivers 1 the nodal unreliability tolerance mandated by security standards which is linked to the customer size at the node and 2 the stochastic nature of component reliability that reflects differing failure rates of network components by combining the two factors the new reliability based pricing model is able to recognize the impact on network investment from network components reliability in addition to their distance and the degree of utilization the concept is firstly demonstrated on three small networks a single circuit system a parallel circuit system and a meshed system the applicability of the new pricing approach to practical systems is then illustrated on a practical distribution network in the u k system

primary commodity prices manufactured goods prices and the terms of trade of developing countries what the long run shows the authors revisit in this article the empirical foundation of the alleged secular decline in the prices of primary commodities relative to those of manufactures they use a newly constructed index of commodity prices and two modified indexes of manufactured good prices and find that from 1900 to 1986 the relative prices of all primary commodities fell on trend by 0 5 percent a year and those of nonfuel primary commodities by 0 6 percent a year they thus confirm the sign but not the magnitude of the trend implicit in the work of prebisch but even the more limited secular decline shown by their relative price indexes may be magnified by an incomplete account of quality improvements in manufactures they then show that the evolution of terms of trade of nonfuel primary commodities is not the same as that of the net barter terms of trade of non oil exporting developing countries finally they find that despite the decline that has probably occurred during the current century in the terms of trade of nonfuel primary commodities the purchasing power of total exports of these products has increased considerably similarly the fall that may have occurred after world war ii in the net barter terms of trade of developing countries seems to have been more than compensated for by the steady improvement in their income terms of trade

probabilistic lmp forecasting considering load uncertainty in power market studies the forecast of locational marginal price lmp relies on the load forecasting results from the viewpoint of planning it is well known that short term load forecasting results always carry certain degree of errors mainly due to the random nature of the load at the same time lmp step changes occur at critical load levels clls therefore it is interesting to investigate the impact of load forecasting uncertainty on lmp with the assumption of a certain probability distribution of the actual load this paper proposes the concept of probabilistic lmp and formulates the probability mass function of this random variable the expected value of probabilistic lmp is then derived as well as the lower and upper bound of its sensitivity in addition two useful curves alignment probability of deterministic lmp versus forecasted load and expected value of probabilistic lmp versus forecasted load are presented the first curve is designed to identify the probability that the forecasted price in a deterministic lmp matches the actual price at the forecasted load level the second curve is demonstrated to be smooth and therefore eliminates the step changes in deterministic lmp forecasting this helps planners avoid the possible sharp changes during decision making process the proposed concept and method are illustrated with a modified pjm five bus system and the ieee 118 bus system

data perturbation based sensitivity analysis of real time look ahead economic dispatch in this paper the sensitivity of look ahead economic dispatch in real time power markets with respect to data perturbation is studied in the look ahead dispatch optimization problem a small change in the data that are used for setting the interspatial and temporal equality inequality constraints and the objective function may negatively affect normal operations such as the calculation of real time wholesale electricity prices and operating costs this could lead to more distorted prices and larger operating costs with the look ahead dispatch than with a static dispatch that use data for a single future time we perturb karush kuhn tucker conditions of the look ahead dispatch optimization formulation and then using them derive a linear sensitivity matrix that assesses the impact of data corruption on look ahead dispatch this matrix illustrates the changing optimal solution of look ahead dispatch subject to potential corruption in various types of spatial and temporal data generator s bidding cost coefficients capacity limits for generators and transmission lines ramp rates and the estimate of initial generation output with ramp constraints and multiple time series of the forecast load for the look ahead horizon the results of the simulation are illustrated with numerical examples in the ieee 14 bus system

using a system model to decompose the effects of influential factors on locational marginal prices locational marginal prices lmps are influenced by various factors such as load uncertainty thermal limit capacity reserve and market power we build a system model to quantitatively analyze the effects of these individual factors and their interactions on the mean and standard deviation of the lmps assuming that the factors are either active or inactive according to the sensitivity analysis results from convex quadratic programming lmps are piecewise linear functions of demand variation which is a key property used in the computation this paper attempts to answer the following types of questions 1 to what extent does market power raise the lmps above the marginal cost 2 what effects will generation or transmission capacity expansion have on relieving high lmps under high demand scenarios an ieee 30 bus test system is used as an example to demonstrate our approach

dynamic translog and linear logit models a factor demand analysis of interfuel substitution in us industrial energy demand abstract we compare and contrast two popular dynamic flexible functional forms for cost functions the translog and the logit j bus econ stat 8 1990 347 353 using data on us industrial energy demand from 1960 to 1992 which has been analysed by previous studies energy econ 11 1989 89 94 appl econ 21 1989 931 945 j bus econ stat 13 1995 459 465 we show the crucial role played by different dynamic formulations of the translog in this analysis of factor demands with respect to rates of dynamic adjustment and substitution possibilities we conclude that the poor performance of the dynamic translog relative to the dynamic logit cannot be explained solely by dynamic model mis specification or the inclusion of price unresponsive non energy fuel use data our most robust empirical result is that coal and oil are substitutes

computing market equilibria with price regulations using mathematical programming one approach to modeling and solving for economic equilibria relies on mathematical programming these models solve for competitive equilibria however policy analysis often requires measuring the impacts of government price regulations that differ from the competitive equilibrium in this paper we provide a unified framework for computing market equilibrium in mathematical programming models in the presence of government price regulations the iterative procedure that we use is essentially a gauss seidel algorithmic strategy the paper concludes by showing how to represent tax rebate programs average cost pricing and price ceilings

when grilli and yang meet prebisch and singer piecewise linear trends in primary commodity prices abstract in this study we test the prebisch singer hypothesis on the secular decline of relative primary commodity prices with the extended grilli and yang 1988 data set ending at 2010 rather than asking whether it holds for the whole sample period we examine if the hypothesis holds sometimes during the sample period by estimating the piecewise linear trends of primary commodity prices we employ the new l1 trend filtering proposed by kim et al 2009 to estimate the piecewise linear trends we find that the prebisch singer hypothesis holds sometimes but not always for many of the primary commodities in the grilli yang data the strength of the prebisch singer hypothesis has become substantially weaker recently as the relative prices of many primary commodities have increased sharply since around 2000

commodity prices and growth in africa a frican economies export primary commodities and most export little else policymakers as well as economists and historians of african economic development have seen these exports as both a hope and a curse the following parable tells the story once upon a time a servant of the ruler discovered a miraculous plant which grew readily in that country and whose seeds could be woven into fine cloth so desirable was this fabric that it became prized all over the world and fetched a high price after two score years the plant accounted for most of the country s trade with the world the ruler ordered the peasants to grow the plant paid them only a fraction of its price and he and his nobles became fabulously wealthy because the ruler wished to be remembered as a great ruler and as the father of his country he used his wealth to build a great army and brought machines from foreign countries to make the fine goods that previously could only be obtained from foreign merchants but the machines often broke down and the goods that they made were of poor quality and after the ruler died they were left to rust under the ruler s successor there was a war in a foreign land where the plant also grew so that there was a great shortage and its price increased threefold in only three seasons the new ruler spent his newfound riches on fantastic extravagance while immense sums were expended on public works after the manner of the east and on productive works carried out in the wrong way or too soon not even the threefold increase in prices could support these expenditures and the country soon found itself deeply in debt when the war ended and the price fell the country could no longer pay the interest on its debt or borrow more money even after it had sold its only useful public work to a foreign power so that power sent a mission to the country the publication of whose report from which the above

piecewise linear trends and cycles in primary commodity prices we extend the methodology put forward in yamada and yoon 2014 journal of international money and finance 42 c 193 207 to analyze the trend and cyclical behavior of relative primary commodity prices these authors propose the use of the so called l1 filter that renders piecewise linear trends of the underlying data our focus on the calibration of such filter and its implications for the empirical analysis of primary commodity prices especially the interpretation given to the resulting trend we also illustrate how suitably calibrated filters may be used to compute piecewise linear super cycles whose turning points are easy to identify

from the classical economists to empiricists a review of the terms of trade controversy contrary to the classical position the works of prebisch and singer in the middle of the last century launched the controversial hypothesis of a long term decline in the terms of trade of primary products vis a vis manufactured goods and a corresponding decline in the terms of trade of developing countries vis a vis advanced ones the present study traces the origin and evolution of the hypothesis and reviews the related statistical debate it also reviews the theoretical support for the prebisch singer hypothesis it is an exercise in the history of economic thought to trace how the controversies surrounding the terms of trade have evolved over time specifically noting that with the development of the field of econometrics the central thesis of the argument got lost somewhere in the realm of hi tech statistical debates

market clearing with stochastic security part i formulation the first of this two paper series formulates a stochastic security constrained multi period electricity market clearing problem with unit commitment the stochastic security criterion accounts for a pre selected set of random generator and line outages with known historical failure rates and involuntary load shedding as optimization variables unlike the classical deterministic reserve constrained unit commitment here the reserve services are determined by economically penalizing the operation of the market by the expected load not served the proposed formulation is a stochastic programming problem that optimizes concurrently with the pre contingency social welfare the expected operating costs associated with the deployment of the reserves following the contingencies this stochastic programming formulation is solved in the second companion paper using mixed integer linear programming methods two cases are presented a small transmission constrained three bus network scheduled over a horizon of four hours and the ieee reliability test system scheduled over 24 h the impact on the resulting generation and reserve schedules of transmission constraints and generation ramp limits of demand side reserve of the value of load not served and of the constitution of the pre selected set of contingencies are assessed

primary commodity prices co movements common factors and fundamentals the behavior of commodities is critical for developing and developed countries alike this paper contributes to the empirical evidence on the co movement and determinants of commodity prices using nonstationary panel methods we document a statistically significant degree of co movement due to a common factor within a factor augmented var approach real interest rate and uncertainty as postulated by a simple asset pricing model are both found to be negatively related to this common factor this evidence is robust to the inclusion of demand and supply shocks which both positively impact on the co movement of commodity prices

unit roots flexible trends and the prebisch singer hypothesis abstract this paper studies the dynamic properties of relative commodity prices especially the prebisch singer hypothesis on their secular decline using a new family of unit root tests based on the fourier approximation to the data s underlying trend the approximation controls for low frequency variations such as structural breaks or the long swings induced by hypothesized super cycles in the data regarding the extant literature we find considerably more evidence against nonstationarity in relative commodity prices and very limited support for the prebisch singer hypothesis

a dynamic analysis of interfuel substitution in u s industrial energy demand using data for 1960 92 to analyze interfuel substitution in the u s industrial sector a dynamic linear logit model is shown to provide superior global properties than a comparable dynamic translog model confirming earlier static results by t j considine 1989 the linear logit model provides a direct unbiased estimate of the rate of dynamic adjustment indicating a median response lag of less than two years excluding fuels used for nonenergy purposes yields larger estimates of the price elasticities for coal and oil and indicates generally greater potential for interfuel substitution than when using aggregate data

a dynamic analysis of interfuel substitution for swedish heating plants abstract this paper estimates a dynamic model of interfuel substitution for swedish heating plants we use the cost share linear logit model developed by considine and mount considine t j mount t d 1984 the use of linear logit models for dynamic input demand systems review of economics and statistics 66 434 443 all estimated own price elasticities are negative and all cross price elasticities are positive the estimated dynamic adjustment rate parameter is small however increasing with the size of the plant and time indicating fast adjustments in the fuel mix when changing relative fuel prices the estimated model is used to illustrate the effects of two different policy changes

trends and contagion in wti and brent crude oil spot and futures markets the role of opec in the last decade abstract this article examines the interconnectedness of wti and brent prices on different resolutions of price movements firstly within a multivariate bekk framework we identify high but volatile correlations with recurring highs around 0 8 and multiple periods of decoupling opec meetings increase the correlation in the short run secondly linear l1 trends reveal that long term movements of wti and brent are driven by the same dynamics confirming the one great pool hypothesis opec meetings have only little impact on long term price trends thirdly we find leading effects of wti over brent by short term trends of several days especially in a negative direction these trends have an asymmetrical effect on volatility negative trends cause a stronger increase than positive trends these findings are of interest to policy makers as well as hedging strategies of crude oil portfolios and provide insight into long term movements of crude prices

the role of energy conservation and natural gas prices in the costs of achieving california s renewable energy goals abstract this paper develops an econometric forecasting system of energy demand coupled with engineering economic models of energy supply the framework is used to quantify the energy and environmental impacts of renewable and natural gas based electricity power generation in california considering the role of on going energy conservation efforts and incorporating different natural gas price scenarios over the forecast horizon 2011 2035 the results indicate that relative to a business as usual scenario of continuing to rely on imported electricity to meet future demand california s renewable portfolio standard rps of 33 renewables by 2020 will increase electricity rates by over 10 however the rps will also provide substantial annual savings in carbon dioxide emissions equal to 40 million metric tons in 2020 continuing non price induced energy conservation at the historical rate will only result in a marginal reduction in electricity rates although lower electricity use means that substantial savings are nonetheless achieved in electricity expenditures in addition continuing trend energy conservation leads to substantial savings in carbon dioxide emissions like the rps developing domestic natural gas generation also leads to rate increases and reductions in carbon dioxide emissions relative to the baseline however these impacts are minor compared to the rps scenario

risk induced resource dependency in capacity investments a capacity acquisition process is resource dependent when the existing resources impact the valuation of new resources and thereby influence the investment decision following a formal analysis of resource dependency we show that uncertainty and aversion to risks are sufficient conditions for resource dependent capacity acquisition distinct from the technology lock in effects of increasing returns to scale or learning risk aversion can induce diversity we develop a stochastic programming framework and solve the optimization problem by decomposing the problem into investment and operational horizon subproblems our computational results for an application to the electricity sector show inter alia that technology choices between low carbon and fossil fuel technologies as well as their investment timings are dependent upon the resource bases of the companies with scale debt leverage and uncertainty effects increasing resource dependency particularly we show that resource dependency can significantly impact the optimal investment decisions and we argue that it should be evaluated at both company and policy levels of analysis

components of nodal prices for electric power systems a method is presented to provide a detailed description of each nodal price for electric power systems by breaking down each nodal price into a variety of parts corresponding to the concerned factors such as generations transmission congestion voltage limitations and other constraints or elements this complete information for nodal prices can be used not only to improve the efficient usage of power grid and congestion management but also to design a reasonable pricing structure of power systems or to provide economic signals for generation or transmission investment several numerical examples demonstrate this approach

financial and operational decisions in the electricity sector contract portfolio optimization with the conditional value at risk criterion abstract the restructuring of electricity markets around the world have caused increased volatility and uncertainty of the price power as a result providers of power now face increased uncertainty and risk in the operational and financial decisions related to procurement providers must seek optimal ways to deliver the required volume of power to retailers and end users while managing risk we consider a mixed integer programming model for a power providing agent that jointly considers the problem of selecting custom electricity contracts and finding the optimal procurement strategy of meeting contract obligations under spot price uncertainty a two stage stochastic integer programming sip model with a conditional value at risk cvar constraint to incorporate risk aversion is developed computational results are presented that demonstrates the cvar approach and the results are compared with a corresponding expected cost minimization approach the sip model with cvar will allow acceptance of contracts at lower prices compared to an approach based on a corresponding risk neutral model as a hedge against uncertainty and mis specified arbitrage

continuous time marginal pricing of electricity the current practice of discrete time electricity pricing starts to fall short in providing an accurate economic signal reflecting the continuous time variations of load and generation schedule in power systems this paper introduces the fundamental mathematical theory of continuous time marginal electricity pricing we first formulate the continuous time unit commitment problem as a constrained variational problem and subsequently define the continuous time economic dispatch ed problem where the binary commitment variables are fixed to their optimal values we then prove that the continuous time marginal electricity price equals to the lagrange multiplier of the variational power balance constraint in the continuous time ed problem the proposed continuous time marginal price is not only dependent to the incremental generation cost rate but also to the incremental ramping cost rate of the units thus embedding the ramping costs in calculation of the marginal electricity price the numerical results demonstrate that the continuous time marginal price manifests the behavior of the constantly varying load and generation schedule in power systems

the cost of solar centric renewable portfolio standards and reducing coal power generation using arizona as a case study abstract this paper develops an econometric forecasting system of energy demand coupled with engineering economic models of energy supply the framework is used to quantify the impact of a state level renewable portfolio standard rps achieved predominately with solar generation we perform the analysis using arizona s rps as a case study over the period 2012 2035 we find if arizona implements its rps when supplying future electricity demand there will be an increase in electricity rates relative to a business as usual scenario of reliance on gas fired generation extending the current regime of tax credits greatly reduces this increase at the taxpayers expense we find that by 2025 arizona s rps will implicitly abate carbon dioxide emissions at a cost between 58 and 82 per metric ton and by 2035 abatement costs are between 22 and 69 per metric ton depending on the future evolution of nature gas prices the rps always leads to a negative impact on social welfare under low gas prices but after 2029 the welfare impact is positive under high gas prices in contrast phasing out arizona s existing coal fired generation always has positive welfare impacts

advanced pricing in electrical systems ii implications part i of this paper set forth a mathematical formulation of a model for real time pricing of electricity that included selected ancillary services and extended the theory to incorporate constraints on power quality and environment impact that often influence the operation of a power system derived herein are optimal real time prices for both real and reactive power the optimal prices are temporally and spatially differentiated the prices derived include additive premia or opportunity costs reflecting the effects of voltage regulation maintenance of generation and transmission reserves regulation of frequency and tie line flows removal and or control of power harmonics and others this paper concludes with a discussion of the implications of the optimal prices for pricing of both retail and wholesale services

estimating the competitive storage model with trending commodity prices we present a method to estimate jointly the parameters of a standard commodity storage model and the parameters characterizing the trend in commodity prices this procedure allows the influence of a possible trend to be removed without restricting the model specification and allows model and trend selection based on statistical criteria the trend is modeled deterministically using linear or cubic spline functions of time the results show that storage models with trend are always preferred to models without trend they yield more plausible estimates of the structural parameters with storage costs and demand elasticities that are more consistent with the literature they imply occasional stockouts whereas without trend the estimated models predict no stockouts over the sample period for most commodities moreover accounting for a trend in the estimation imply price moments closer to those observed in commodity prices our results support the empirical relevance of the speculative storage model and show that storage model estimations should not neglect the possibility of long run price trends

optimal power flow with expected security costs this paper discusses the expected security cost optimal power flow escopf problem the objective of the problem is to minimize the expected total cost of system operation subject to power system constraints and expected security costs the probabilities of operating in the pre contingency operating state and the probabilities of operating in all possible post contingency states are considered in addition the escopf problem includes the cost of interrupting customer load and the cost of generator ramping which may be necessary when a contingency occurs the solution to the escopf problem gives information regarding the marginal value of spinning reserve and the marginal value of interruptible load a graphical tool is used to view the problem solution

limits to growth redux a system dynamics model for assessing energy and climate change constraints to global growth abstract this study investigates the notion of limits to socioeconomic growth with a specific focus on the role of climate change and the declining quality of fossil fuel reserves a new system dynamics model has been created the world energy model wem is based on the world3 model the limits to growth meadows et al 2004 with climate change and energy production replacing generic pollution and resources factors wem also tracks global population food production and industrial output out to the year 2100 this paper presents a series of wem s projections each of which represent broad sweeps of what the future may bring all scenarios project that global industrial output will continue growing until 2100 scenarios based on current energy trends lead to a 50 increase in the average cost of energy production and 2 4 2 7 c of global warming by 2100 wem projects that limiting global warming to 2 c will reduce the industrial output growth rate by 0 1 0 2 however wem also plots industrial decline by 2150 for cases of uncontrolled climate change or increased population growth the general behaviour of wem is far more stable than world3 but its results still support the call for a managed decline in society s ecological footprint

optimal return and rebate mechanism in a closed loop supply chain game abstract within a closed loop supply chain clsc framework we study several consumer return behaviors for the used products which are based on the product prices and rebates consumers evaluate the rebate they receive as well as the price of the new product before deciding whether to dump a return therefore the number of used products returned is examined under two types of rebates a fixed rebate and a variable rebate we search for the optimal rebate mechanism and find that the clsc profits are higher under an variable rebate policy this finding justifies the industry practices that employ a rebate mechanism based on both the value and the price of used item we offer two types of solution concepts to the clsc games open loop stackelberg solution and markov perfect stackelberg solution which are commonly employed in the dynamic games literature while we mainly employ markovian equilibrium we also allow firms to utilize open loop strategies so as to assess the impact of precommitment on the market outcomes therefore we offer a comprehensive analysis of all possible market equilibrium solutions under different strategic considerations and the commitment deliberations we show that under the fixed rebate regime open loop solution coincides with markov perfect solution furthermore we show how consumer return behavior impacts the dynamic nature of the game we find that the time frame is irrelevant if firms offer a fixed rebate in contrast the game will be fully dynamic when firms offer a variable rebate