role of residential demand response in modern electricity markets abstract electricity generation must match the demand at each instant following seasonal patterns and instantaneous fluctuations thus one of the biggest drivers of costs and capacity requirements is the electricity demand that occurs during peak periods this paper reviews market related problems of modern electric grids and possible solutions to address them in particular one techno economical solution namely residential demand response programs enabled by a smart grid is analyzed and modeled in detail the implications of this solution from both economic and policy perspectives are discussed the analysis results in several insights first a local optimum does not generally lead to a global optimum especially for complex markets second in this approach there exists a disconnection between the locus of the problem electric utilities and the locus of the solution change of demand third any techno economic solution must be carefully designed and global impact should be evaluated to ensure that the final objective is achieved and fourth two way communication is an essential requirement for the successful deployment of smart grids

wind power price trends in the united states struggling to remain competitive in the face of strong growth the amount of wind power capacity being installed globally is surging with the united states the world leader in terms of annual market share for three years running 2005 2007 the rapidly growing market for wind has been a double edged sword however as the resulting supply demand imbalance in wind turbines along with the rising cost of materials and weakness in the u s dollar has put upward pressure on wind turbine costs and ultimately wind power prices two mitigating factors reductions in the cost of equity provided to wind projects and improvements in project level capacity factors have helped to relieve some of the upward pressure on wind power prices over the last few years because neither of these two factors can be relied upon to further cushion the blow going forward policymakers should recognize that continued financial support may be necessary to sustain the wind sector at its current pace of development at least in the near term though this article emphasizes developments in the u s market for wind power those trends are similar to and hold implications for the worldwide wind power market

share contracts and their rationale lessons from marine fishing most of the existing literature on share contracts is based explicitly or implicitly on agriculture a sector in which share contracts are seldom dominant and apparently on the decline moreover since agricultural activities have some rather special characteristics the purpose of the present article is to analyse contractual choice and especially the choice of share contracts in a sector in which share contracts are dominant namely fishing in the process of explaining the dominance of share contracts in fishing the article also explains a some heretofore neglected features of these share contracts such as the way in which shares are calculated and the treatment of repair and maintenance expenditures b the nature and extent of interlinked transactions c the exceptional cases where share contracts are not used and d the relevance of varying environmental conditions and especially those of poor developing countries to the nature of contracts in fishing and to the differences therein between

the structure of canadian inter industry r d spillovers and the rates of return to r d this paper estimates the effects of interindustry r d spillovers on the production cost of nine major canadian industries production costs in all nine are affected by spillovers and six industries are influenced by at least two different source industries rates of return to r d capital for each industry are also estimated private rates of return on r d are at least two and a half times those on physical capital rates of return on r d inclusive of spillovers are also computed for industries that are major sources of spillover the spillover inclusive returns are at least twice the private returns copyright 1989 by blackwell publishing ltd

the effects of environmental regulation on technology diffusion the case of chlorine manufacturing we use a hazard model to estimate the effect of environmental regulation on the diffusion of membrane cell production technology in the chlorine manufacturing industry we estimate the effect of regulation on both the adoption of the membrane technology at existing plants and on the exit of existing plants using older technologies we find that environmental regulation did affect the diffusion of the cleaner technology in the chlorine industry however it did so not by encouraging the adoption of membrane cells by existing facilities but by reducing the demand for chlorine and hence encouraging the shutdown of facilities using the environmentally inferior options this abstract was borrowed from another version of this item

international variations in expected equity premia role of financial architecture and governance abstract estimates of ex ante equity premia are important in planning investments in pension funds life insurance pools and for other long term financial obligations or goals however while global cross border investment positions and flows have been rising there is little research on non us ex ante equity premia or on their determinants in a global setting this paper uses data on a recent 8 year period from 33 countries and models simultaneously our estimate of the ex ante equity premium as a dependent variable and our measure of financial architecture as an instrumental variable we document that ex ante equity premia are larger in countries that have a more bank oriented financial architecture are wealthier and have better governance these results are robust to alternative model specifications and estimation techniques given the importance of equity premia and financial architecture these results should be of much interest to scholars managers regulators and policy makers

the impact of future carbon prices on ccs investment for power generation in china abstract carbon capture and storage ccs in china is currently discussed extensively but few in depth analyses focusing on economics are observed in this study we answer two related questions about the development of ccs and power generation technologies in china 1 what is the breakeven carbon dioxide price to justify ccs installation investment for integrated gasification combined cycle igcc and pulverized coal pc power plants and 2 what are the risks associated with investment for ccs to answer these questions we build a net present value model for igcc and pc plants with capacity of 600 mw with assumptions best representing the current technologies in china then we run a sensitivity analysis of capital costs and fuel costs to reveal their impact on the carbon price and analyze the risk on investment return caused by the carbon price volatility our study shows that in china a breakeven carbon price of 61 tonne is required to justify investment on ccs for pc plants and 72 tonne for igcc plants in this analysis we also advise investors on the impact of capital and fuel costs on the carbon price and suggest optimal timing for ccs investment

making retirement income last a lifetime to enable investors to spend down the assets in their defined contribution accounts more easily the authors propose a decumulation benchmark comprising a laddered portfolio of tips for the first 20 years consuming 88 percent of available capital and a deferred life annuity purchased with the remaining 12 percent this portfolio can be used directly by the investor akin to indexing or as a benchmark for evaluating the performance of a more aggressive strategy

teams take the better risk abstract one reason why decision makers are often teams and not individuals may be that team decisions comply more closely with economic rationality we compare individual and team decisions when systematic deviations from the expected utility theory eut and the portfolio selection theory pst are to be expected we find almost no evidence for the greater compliance of team decisions with the principles of eut however there is substantial evidence for the consistency of team decisions with the pst compared to individuals teams accumulate significantly more expected value at a significantly lower total risk measured in standard deviation s d

an analysis of optimal advertising under uncertainty we examine the firm s optimal advertising behavior under conditions of uncertainty for the static one period model we show that the firm s attitude toward risk may be responsible for the potential divergence between advertising decisions under uncertainty and those under deterministic conditions for the dynamic multi period model the ultimate impact of uncertainty on advertising is further complicated when the sales response function contains an unknown parameter and the firm wishes to gain more information about it through experimentation we demonstrate that whether it is optimal for the firm to experiment at an advertising rate higher equal to or lower than the myopic one period level would depend on the specification of the response function finally we offer some empirical evidence for our assumption of a quadratic sales response function using time series data of twelve major brands of cigarettes

managing channel profits a channel of distribution consists of different channel members each having his own decision variables however each channel member s decisions do affect the other channel members profits and as a consequence actions a lack of coordination of these decisions can lead to undesirable consequences for example in the simple manufacturer retailer consumer channel uncoordinated and independent channel members decisions over margins result in a higher price paid by the consumer than if those decisions were coordinated in addition the ensuing suboptimal volume leads to lower profits for both the manufacturer and the retailer this paper explores the problems inherent in channel coordination we address the following questions what is the effect of channel coordination what causes a lack of coordination in the channel how difficult is it to achieve channel coordination what mechanisms exist which can achieve channel coordination what are the strengths and weaknesses of these mechanism what is the role of nonprice variables e g manufacturer advertising retailer shelf space in coordination does the lack of coordination affect normative implications from in store experimentation can quantity discounts be a coordination mechanism are some marketing practices actually disguised quantity discounts we review the literature and present a simple formulation illustrating the roots of the coordination problem we then derive the form of the quantity discount schedule that results in optimum channel profits this article was originally published in marketing science volume 2 issue 3 pages 239 272 in 1983

investment risks under uncertain climate change policy abstract this paper describes results from a model of decision making under uncertainty using a real options methodology developed by the international energy agency iea the model represents investment decisions in power generation from the perspective of a private company the investments are subject to uncertain future climate policy which is treated as an external risk factor over which the company has no control the aims of this paper are to i quantify these regulatory risks in order to improve understanding of how policy uncertainty may affect investment behaviour by private companies and ii illustrate the effectiveness of the real options approach as a policy analysis tool the study analysed firms investment options of coal and gas fired power plants and carbon capture and storage ccs technologies policy uncertainty is represented as an exogenous event that creates uncertainty in the carbon price our findings indicate that climate policy uncertainty creates a risk premium for power generation investments in the case of gas and coal fired power generation the risk premium would lead to an increase in electricity prices of 5 10 in order to stimulate investment in the case of ccs the risk premium would increase the carbon price required to stimulate investment by 16 37 compared to a situation of perfect certainty the option to retrofit ccs acts as a hedge against high future carbon prices and could accelerate investment in coal plant this paper concludes that to minimise investment risks in low carbon technologies policy makers should aim to provide some long term regulatory certainty

a review on global wind energy policy with the increasing negative effects of fossil fuel combustion on the environment in addition to limited stock of fossil fuel have forced many countries to inquire into and change to environmentally friendly alternatives that are renewable to sustain the increasing energy demand energy policy plays a vital role to mitigate the impacts of global warming and crisis of energy availability this paper explores the wind energy industry from the point of view of the wind energy policy it is noticed that energy policy could help increasing wind power generation as well as stimulating the energy industry it may be stated that without specific energy policy a country would not be able to solve the acute problems like reducing greenhouse gases ghgs emission scarcity of energy etc this paper discussed the existing successful energy policies for few selected countries based on literatures it has been found that fit rps incentives pricing law and quota system are the most useful energy policies practiced by many countries around the world then status of wind energy policy for malaysia was investigated and compared with few selected countries around the world

optimal carbon taxes for china and implications for power generation welfare and the environment abstract china is expected to constitute about half of the world s emissions between 2010 and 2040 as concerns about climate change intensify the chinese government is poised to commit to a low carbon economy these conditions make china a suitable case in which to study how emission policies impact on energy supply welfare and the environment to achieve this purpose we incorporate abatement technologies into the gtap computable general equilibrium model and show that optimal taxes range between 0 03 for services and 2 02 for manufacturing in most cases simulated tax rates are by far higher than pollution taxes stipulated in the new chinese environmental tax law furthermore despite a decline in output of many sectors including the electricity sector overall welfare gains exist from introducing carbon taxes moreover these taxes reduce environmental pollution by approximately 62 5 in general carbon taxes are insufficient for mitigation in china and due to a coal dominant energy structure implementing these taxes leads to a decline in power generation hence the chinese aggressive investment strategy for renewable electricity technologies as stipulated in its 13th five year plan is understandable

the national energy modeling system a large scale energy economic equilibrium model the national energy modeling system nems is a large scale mathematical model that computes equilibrium fuel prices and quantities in the u s energy sector and is currently in use at the u s department of energy doe at present to generate these equilibrium values nems iteratively solves a sequence of linear programs and nonlinear equations this is a nonlinear gauss seidel approach to arrive at estimates of market equilibrium fuel prices and quantities in this paper we present existence and uniqueness results for nems type models based on a nonlinear complementarity variational inequality problem format also we document mathematically for the first time how the inputs and the outputs for each nems module link together

an economic perspective on experience curves and dynamic economies in renewable energy technologies this paper analyzes dynamic economies in renewable energy technologies the paper has two contributions the first is to test the robustness of experience in solar photovoltaic solar thermal and wind energy to the addition of an explicit time trend which has been done in experience studies for other industries but not for renewable energy technologies estimation is carried out on the assumption that cumulative capacity industry production average firm production and electricity generation affect experience and thus the fall in price the second contribution is to test the impact of r d on price reduction in general cumulative experience is found to be highly statistically significant when estimated alone and highly statistically insignificant when time is added to the model the effect of r d is small and statistically significant in solar photovoltaic technology and statistically insignificant in solar thermal and wind technologies

risk sharing on the labour market and second best wage rigidities the starting point of the analysis is that a significant proportion of the labour force is not covered by efficient labour contracts in particular the non existence of forward labour contracts limits the opportunity of efficient risk sharing through private arrangements among young labour suppliers and capital owners in such a context state dependent labour taxes and employment subsidies would be required to achieve ex ante pareto efficiency in the absence of employment subsidies a certain limited degree of downward wage rigidity is in general pareto superior to full wage flexibility at the second best optimum so defined productive efficiency is sacrificed in some states in order to achieve greater efficiency in risk sharing thus the unemployment associated with wage rigidity is inefficient though voluntary due to the levels of benefits and second best efficient a limited degree of wage discrimination by hiring date is typically part of the second best policy

arbitrating a dispute a decision analytic approach many collective decision making and bargaining situations can be described through the set of the feasible joint evaluations of all conceivable settlements attention should then be restricted to that subset pareto optimal frontier from which no joint gains are possible hence the focal issue becomes which element of the pareto optimal subset should be chosen as a solution to the dispute this paper proposes an arbitration procedure to address this issue the proposed approach decision analytic in its nature is inspired by lavalle s lavalle i h 1978 fundamentals of decision analysis holt rinehart and winston new york allocation function approach which is not specific on how to obtain an allocation function and by eliashberg and winkler s eliashberg j r l winkler 1981 risk sharing and group decision making management sci 27 november 1221 1235 work which does not accommodate probability differences within the group after the new approach is presented its implications are examined for some likely scenarios and examples are considered

technological learning and renewable energy costs implications for us renewable energy policy abstract this paper analyzes the relationship between current renewable energy technology costs and cumulative production research development and demonstration expenditures and other institutional influences combining the theoretical framework of learning by doing and developments in learning by searching with the fields of organizational learning and institutional economics offers a complete methodological framework to examine the underlying capital cost trajectory when developing electricity cost estimates used in energy policy planning models sensitivities of the learning rates for global wind and solar photovoltaic technologies to changes in the model parameters are tested the implications of the results indicate that institutional policy instruments play an important role for these technologies to achieve cost reductions and further market adoption

when efficient is insufficient fairness in decisions affecting a group many key decisions have significant consequences for a group of people rather than a single individual in some cases traditional group decision making techniques such as negotiation voting or compromise can be employed by the group members themselves to determine a satisfactory course of action in other instances however the intervention of a central decision maker may be necessary intervening on behalf of a group raises additional concerns for the decision maker one of which is fairness this paper builds upon envy based fairness concepts from the fair allocation literature and theories of ex ante and ex post equitable distributions from the social risk literature to develop a model for choice among limited options under uncertainty when preferences are heterogeneous the model is therefore appropriate when other existing models are not an example demonstrates an application of the model for choice under uncertainty and contrasts the approach and decision recommendation with that of existing models by quantifying the degree of envy rather than treating it dichotomously the approach captures the balance between fairness and efficiency some envy may be tolerated if it brings greater overall utility and or if some envy already exists in the status quo option lastly implementation issues and the impact of differing preferences and attitudes toward risk on fairness and efficiency considerations are explored

american policy conflict in the greenhouse divergent trends in federal regional state and local green energy and climate change policy climate change threatens significant impacts on global ecosystems and human populations to address this challenge industrialized nations have ratified the kyoto protocol and undertaken commitments to reduce emissions of greenhouse gases the primary agents linked to anthropogenic alteration of earth s climate by contrast the us government led by the bush administration has rejected mandatory targets for curbing emissions under the protocol and has instead pursued voluntary mitigation measures amid a larger push for clean coal and next generation nuclear technologies these actions in total have fueled global perceptions that the us is not acting in substantial ways to address climate change nevertheless action within the us is indeed moving forward with states cities and regional partnerships filling the federal leadership vacuum this paper reviews the diverse policies strategies and cooperative frameworks that have emerged at regional state and local levels to guide climate protection and identifies the environmental and economic benefits linked to such programs the paper also attempts to explain the existing federal impasse on climate policy with attention given to how sub national efforts may ultimately obviate national governmental inaction r 2007 elsevier ltd all rights reserved

the value of marketing expertise this paper has three objectives 1 to construct a theoretical model that aids in evaluating marketing expertise 2 to use that theoretical model to identify factors influencing the value of marketing expertise and 3 to empirically test the model by observing how different market conditions influence whether companies emphasize marketing expertise we accomplish these objectives as follows first we use decision theory to find an expression for the expected value of marketing expertise we do not use decision analysis in the normative tradition nor do we assume that firms actually use formal decision analysis rather we assume that firms are rational and that decision theory describes their actions given that assumption we predict how firms should evaluate marketing here marketing expertise helps a firm make better marketing decisions at least on average hence the value of marketing expertise increases as marketing decisions become more important second consistent with decision theory

carbon prices and ccs investment a comparative study between the european union and china abstract carbon capture and storage is considered as a key option for climate change mitigation policy makers and investors need to know when ccs becomes economically attractive integrating ccs in a power plant adds significant costs which can be offset by a sufficient co 2 price however most markets have failed currently the weak carbon price threatens ccs deployment in the european union eu in china a carbon regulation is appearing and ccs encounters a rising interest this study investigates two questions how much is the extra cost of a ccs plant in the eu in comparison with china second what is the co 2 price beyond which ccs plants become more profitable than reference plants in the eu and in china to address these issues i conducted a literature review on public studies about ccs costs to objectively assess the profitability of ccs plants i constructed a net present value model to calculate the levelised cost of electricity and the breakeven co 2 price ccs plants become the most profitable plant type beyond 115 tco 2 in the eu vs 45 tco 2 in china offshore transport and storage costs i advise on the optimal plant type choice depending on the co 2 price in both countries

probabilistic decision model of wind power investment and influence of green power market this paper presents results from a model of a representative wind power investor s decision making process using a monte carlo simulation of a project financial analysis data in the form of probability distribution functions pdfs for key input variables were collected from interviews with investors and other professionals active in the u s wind power industry using a formal expert elicitation protocol this study presents the first quantitative estimates of the effect of the u s voluntary renewable energy certificate rec market on renewable energy generation the results indicate that the investment decisions of wind power project developers in the united states are unlikely to have been altered by the voluntary rec market the problem with the current voluntary rec market is that it does not offer developers a reliable risk adjusted revenue stream consequently the claims by u s green power retailers and promoters that voluntary market recs result in additional wind power projects lack credibility even dramatic increases in voluntary market rec prices in the absence of long term contracts were found to have only a small effect on investor behavior

the influence of market demand upon innovation a critical review of some recent empirical studies abstract a number of recent empirical studies of technical change at the level of the individual firm have concluded that market demand is the dominant influence upon the innovation process calling forth innovations in market economies the pace of innovation in the private sector heavily influences the growth of national output and productivity and these studies and their conclusions have therefore received much attention having been extensively quoted in discussions of appropriate government policy for the encouragement of innovation this paper reviews a number of these studies and concludes that their findings and the interpretations of their findings in the secondary literature are seriously flawed and in many cases invalid the proposition that market demand governs the innovation process is by no means conclusively demonstrated in these studies and they are therefore inadequate and inappropriate guides for the formulation of policy most of the studies examined employ a working definition of demand factors which is so broad as to embrace a range of possible influences upon innovation which should more properly be classified elsewhere the concept of demand utilized in these studies bears little resemblance to the more restrictive and precise definition of market demand found in economics in addition the phenomena analyzed in these studies are a very heterogeneous lot the studies do not address identical empirical questions and their findings are as a result neither uniform nor unambiguous both demand and supply side influences are crucial to understanding the innovation process and it is the exclusive preoccupation with only one set of these forces which is criticized in this paper some implications of the criticism for government policy toward innovation are discussed in the conclusion

fairness and social risk i unaggregated analyses this paper is the second of a two paper study of fairness issues for decisions that affect the benefits received and the risks encountered by a population the study examines fairness for individuals and for homogeneous groups within the population it considers fairness both for population benefit risk profiles and for probability distributions over profiles our study bases fairness on notions of envy among individuals and groups the first paper focused on fairness in profiles and profile distributions when benefits and risks are not aggregated the present paper uses individual preferences to assess fairness when benefits and risks are aggregated within groups or over the population it concentrates on intergroup envy measures and fairness indices that account for ways that aggregated benefits and risks might be allocated to members of groups or to groups within the population

patterns of attention to renewable energy in the british farming press from 1980 to 2013 abstract the farming sector is a major actor in developing renewable energy providing sites feedstock and investment media coverage can both drive and reflect levels of interest in renewable energy and affect policy support and farmer decision making about deployment this paper presents a content analysis of attention to renewable energy in the british farming press from 1980 to 2013 identifying the topics which sparked sustained media interest cycles of increased attention to specific types of renewable energy are made evident through quantification of article frequencies and qualitative analysis of content the findings contribute to the explanation of the role of information in the diffusion of renewable energy wind energy and liquid biofuels have received the most attention with multiple attention cycles whereas photovoltaics and anaerobic digestion have received focused attention only in recent years policy changes particularly support measures emerge as the most important driver of media attention although public controversies particularly in relation to wind energy lead to longer periods of attention attention typically increases when opportunities in renewable energy emerge and then quickly shifts to a longer stage of focused attention in which opportunities problems and solutions are explored and advice is offered before attention declines the media thus clearly play a role in informing farmers about opportunities arising in relation to renewable energy technology and policy developments but are less helpful in providing on going and consistent information about recurrent and more complex problems thus the farming press appears likely to have the strongest impact on early adopters of renewable technologies but is unlikely to contribute to diffusion at later stages when potential adopters are less willing to bear uncertainties

ex post analysis of economic impacts from wind power development in u s counties wind power development has surged in recent years in the united states policymakers and economic development practitioners to date have typically relied upon project level case studies or modeled input output estimates to assess the economic development impacts from wind power often focusing on potential local state wide or national employment or earnings impacts building on this literature we conduct an ex post econometric analysis of the county level economic development impacts of wind power installations from 2000 through 2008 in a large wind rich region in the country taking into account factors influencing wind turbine location we find an aggregate increase in county level personal income and employment of approximately 11 000 and 0 5 jobs per megawatt of wind power capacity installed over the sample period of 2000 to 2008 these estimates appear broadly consistent with modeled input output results and translate to a median increase in total county personal income and employment of 0 2 and 0 4 for counties with installed wind power over the same period

on the sources of technological change assessing the evidence this paper uses a selective review of the economic literature on technological change to support four points that are important for interpreting and incorporating technological change into formal models of energy and the environment the review 1 supports the notion that no single source dominates the process of technological change it supports roles for rd 3 indicates that these spillovers are often indirect requiring own industry activities to utilize and 4 indicates that simple experience curve calibrations often used in formal models likely include a range of sources of technological change in addition to learning by doing some of which might not be induced by the sorts of policies typically considered in the climate context

cost and co2 reductions of solar photovoltaic power generation in china perspectives for 2020 abstract to improve the understanding of the cost and benefit of photovoltaic pv power generation in china we analyze the per kwh cost fossil energy replacement and level of co2 mitigation as well as the cost per unit of reduced co2 of pv power generation in 2020 at the province level three potential pv systems are examined large scale pv lspv building integrated pv bipv and distributed pv systems used in remote rural areas which have very low capacities the results show that in 2020 pv power generation could save 17 4 mtce fossil energy and 46 5 tg co2 compared with 600 mwe coal fired supercritical units also in 2020 the costs of solar electricity could be reduced by approximately 60 as compared to 2010 but would still be 11 74 higher than the current grid prices the pv electricity costs vary significantly among provinces in the economically developed eastern provinces the pv electricity mainly bipv is 0 67 0 86 rmb kwh this rate is close to grid parity owing to high grid prices but the co2 mitigation cost is high 456 693 rmb mg co2 the pv electricity mainly lspv in solar resource rich western provinces has lower cost 0 45 0 75 rmb kwh and lower co2 mitigation cost 172 419 rmb mg co2 but is farther from grid parity due to the low local grid price from a cost effective perspective lspv in the west provinces should be the first priority in pv deployment strategies and should receive strong financial support from the government this study provides a quantitative province specific analysis of pv power generation which can be used to support various pv subsidy policies

policies and market factors driving wind power development in the united states abstract in the united states there has been substantial recent growth in wind energy generating capacity with growth averaging 24 percent annually during the past five years about 1700 mw of wind energy capacity was installed in 2001 while another 410 mw became operational in 2002 during 2003 development activity has remained strong with an estimated 1600 mw of capacity installed with this growth an increasing number of states are experiencing investment in wind energy projects currently about half of all states host at least one wind power project this paper explores the key factors at play in the 12 states in which a substantial amount of wind energy capacity has been developed or planned some of the factors that are examined include policy drivers such as renewable portfolio standards rps federal and state financial incentives as well as market drivers such as consumer demand for green power natural gas price volatility and wholesale market rules

the ability of nash s theory of cooperative games to predict the outcomes of buyer seller negotiations a dyad level test this research develops and implements a dyad level procedure for testing whether the outcomes of buyer seller negotiations correspond to settlements prescribed by nash s theory of cooperative games the procedure entails a multivariate statistical test in which some parameters are estimated by simulation while others are provided directly from the assessment of negotiator utility functions by means of conjoint analysis the procedure is applied to an experiment in which subjects participated in a realistic role playing exercise that replicated the purchase of television advertising time results indicate that at the 0 01 significance level 57 8 of the dyads can be rejected as not having achieved nash solutions these results and their implications for marketing practitioners as well as future research are discussed

understanding wind turbine price trends in the u s over the past decade understanding wind turbine price trends in the u s over the past decade mark bolinger and ryan wiser lawrence berkeley national laboratory pre print of article submitted to energy policy abstract on a per kw basis wind turbine prices in the u s have declined by nearly one third on average since 2008 after having previously doubled over the period from 2002 through 2008 these two substantial and opposing trends over the past decade and particularly the earlier price doubling run counter to the smooth gradually declining cost trajectories predicted by standard learning curve theory taking a bottom up approach we examine seven possible drivers of wind turbine prices in the u s with the goal of estimating the degree to which each contributed to the doubling in turbine prices from 2002 through 2008 as well as the subsequent decline in prices through 2010 in aggregate these seven drivers which include changes in labor costs warranty provisions manufacturer profitability turbine scaling raw materials prices energy prices and foreign exchange rates explain from 70 to 90 depending on the year of empirically observed wind turbine price movements in the u s through 2010 turbine scaling is found to have been the largest single contributor to the price doubling through 2008 although the incremental cost of scaling has been justified by greater energy capture resulting in a lower cost of wind generation acknowledgments the work described in this article was funded by the u s department of energy s wind water power program within the office of energy efficiency and renewable energy under contract no de ac02 05ch11231 disclaimer this document was prepared as an account of work sponsored by the united states government while this document is believed to contain correct information neither the united states government nor any agency thereof nor the regents of the university of california nor any of their employees makes any warranty express or implied or assumes any legal responsibility for the accuracy completeness or usefulness of any information apparatus product or process disclosed or represents that its use would not infringe privately owned rights reference herein to any specific commercial product process or service by its trade name trademark manufacturer or otherwise does not necessarily constitute or imply its endorsement recommendation or favoring by the united states government or any agency thereof or the regents of the university of california the views and opinions of authors expressed herein do not necessarily state or reflect those of the united states government or any agency thereof or the regents of the university of california ernest orlando lawrence berkeley national laboratory is an equal opportunity employer

design limitations in australian renewable electricity policies abstract renewable electricity is pivotal to the medium and long term reduction of australia s greenhouse gas ghg emissions if deep cuts in them are eventually implemented this paper examines the effectiveness of the principal existing policies that could potentially promote the expansion of renewable electricity relec in australia the expanded renewable energy target ret the proposed emissions trading scheme ets and the state and territory based feed in tariffs we find the effectiveness of ret is severely eroded by the inclusion of solar and heat pump hot water systems by the inclusion of phantom tradable certificates and by high electricity consumption growth we also find that the ets will not produce a high enough carbon price to assist most relec technologies before 2020 and that most of the feed in tariffs exclude large scale relec and will give little assistance to small scale relec because they are mostly net tariffs unless there is a major revision of its relec policy mechanisms australia will fail to reach its renewable electricity target and in particular will fail to build up its solar generation capacity which could be a major source of future deep cuts in the country s electricity generation emissions

efficient feed in tariff policies for renewable energy technologies feed in tariff fit policies aim at driving down the cost of renewable energy by fostering learning and accelerating the diffusion of green technologies under fit mechanisms governments purchase green energy at tariffs that are set above market price the success or failure of fit policies in turn critically depend on how these tariffs are determined and adjusted over time this paper provides insights into designing cost efficient and socially optimal fit programs our modeling framework captures key market dynamics as well as investors strategic behavior in this framework we establish that the current practice of maintaining constant profitability is theoretically rarely optimal by contrast we characterize a no delay region in the problem s parameters such that profitability should strictly decrease over time if the diffusion and learning rates belong to this region in this case investors never strategically postpone their investment to a later period when the diffusion and learning rates

optimal emission taxes for full internalization of environmental externalities abstract the present study proposes a set of optimal emissions fees that could be used to reduce the damages caused by industrial pollution the approach we use allows for the setting of pollution taxes at their economically appropriate level in particular tax rates are computed for china india and 19 sub saharan african countries all other world regions are grouped according to income level such as low income lower middle income upper middle income and high income economies our results show that constructed optimal pollution taxes range as high as 2 9 per 1 dollar of output for heavy manufacturing in the high income countries and as low as 0 01 in the service sectors of the low income countries these results show that a full internalization of the damages in each sector calls for raising the tax rates in some sectors and lowering them in others

carbon pricing and general equilibrium under leontief production technology abstract comparing temperature and emissions data does not clearly show a relationship between the two variables going further this study combines leontief production technology with a computable general equilibrium model of global trade in order to quantitatively test the implications of mitigation policies for welfare and the environment we compute optimal emissions taxes and show that administering carbon fees reduces environmental damages by nearly 50 however there is a tradeoff effect on production which calls for caution when implementing environmental policies in general environmental benefits and resources shifting due to carbon taxes lead to welfare gains

deregulation and restructuring of the global electricity supply industry and its impact upon power plant suppliers abstract this paper analyses the deregulation and restructuring of the global electricity supply industry and its impact upon fuel usage generation technologies and suppliers of power plant deregulation encouraged the growth of new independent power producers whose business requirements transformed the power plant industry the plant suppliers had to develop new capabilities and services to compete in the global market economies of scale and scope became crucial given the cost of developing the new technologies and providing the services required by the operators this led to the global consolidation of the power plant industry because only large integrated power engineering companies had the necessary resources and capabilities to compete in the new global environment

do forest assets hedge inflation forest assets are commonly viewed as good hedges against inflation the view is based largely however on anecdotal evidence rather than empirical analysis this paper examines the historical relationship between forestry returns and inflation the results suggest that forests in the u s west and south have been superior hedges against higher than anticipated inflation forests in the northeast have been less effective inflation hedges the results also indicate that western and southern forests have been overvalued during periods of relatively high expected inflation markets for forests in the northeast however have been relatively efficient processors of inflation expectations

sustainable energy systems role of optimization modeling techniques in power generation and supply a review electricity is conceivably the most multipurpose energy carrier in modern global economy and therefore primarily linked to human and economic development energy sector reform is critical to sustainable energy development and includes reviewing and reforming subsidies establishing credible regulatory frameworks developing policy environments through regulatory interventions and creating market based approaches energy security has recently become an important policy driver and privatization of the electricity sector has secured energy supply and provided cheaper energy services in some countries in the short term but has led to contrary effects elsewhere due to increasing competition resulting in deferred investments in plant and infrastructure due to longer term uncertainties on the other hand global dependence on fossil fuels has led to the release of over 1100 gtco2 into the atmosphere since the mid 19th century currently energy related ghg emissions mainly from fossil fuel combustion for heat supply electricity generation and transport account for around 70 of total emissions including carbon dioxide methane and some traces of nitrous oxide this multitude of aspects play a role in societal debate in comparing electricity generating and supply options such as cost ghg emissions radiological and toxicological exposure occupational health and safety employment domestic energy security and social impressions energy systems engineering provides a methodological scientific framework to arrive at realistic integrated solutions to complex energy problems by adopting a holistic systems based approach especially at decision making and planning stage modeling and optimization found widespread applications in the study of physical and chemical systems production planning and scheduling systems location and transportation problems resource allocation in financial systems and engineering design this article reviews the literature on power and supply sector developments and analyzes the role of modeling and optimization in this sector as well as the future prospective of optimization modeling as a tool for sustainable energy systems

cost of power or power of cost a u s modeling perspective abstract future scenarios and assessment studies used to prepare for long term energy transitions and develop robust strategies to address climate change are highly dependent on the assessment of technology characteristics and availability the electric power sector in the united states recently experienced a significant cost escalation e g construction costs for large plants such as nuclear and coal fired power plants doubled between 2003 and 2007 we assess the main drivers of this escalation while many factors have affected costs some of the most significant include cost of materials particularly the price of metals and to a lesser extent cement possible increases in labor quantity requirements the aggressive worldwide competition for power plant design and construction resources driven by high demand in asia market and regulatory changes and general uncertainty about future regulations and climate policies we recalibrate power sector technology costs in the global change assessment model gcam based on an extensive literature review of recent post 2010 studies and in the process develop a coherent and updated set of current cost and performance assumptions for all major electricity generating technologies while current cost and performance assumptions of electricity generating technologies are key drivers of short term technology deployment and technology mix in the electricity sector medium and long term deployment pathways are significantly affected by assumed efficiency improvement rates and cost reductions we develop and demonstrate a method to project efficiency and construction cost of power plants and report a sensitivity analysis to explore the importance of such assumptions in future scenarios generated by gcam

decision analysis models for social attitudes toward inequity social preferences for equity in the distribution of net benefits are not represented in a cost benefit study by the sum of the individuals net present values this paper presents two different decision analysts models for representing such an equity issue for each model conditions on the tradeoffs between different individuals are shown to imply that preferences can be represented by a special type of group value function procedures are presented by which such a group value function can be determined and used as part of a public policy evaluation

economics of ccs for coal plants impact of investment costs and efficiency on market diffusion in europe abstract in this paper we analyze how the development of the carbon capture and storage ccs technology used in coal fired power plants affects its market diffusion specifically we 1 show the significant variance in expectations about the economics of commercial grade ccs hard coal power plants observed in the literature 2 analyze the impact of ccs economics on electricity generation costs and 3 investigate the expected deployment of ccs in the european power sector depending on the variance of two main factors efficiency and investment cost using the bottom up electricity sector model hector simulation results show that investment costs strongly influence the market deployment of coal fired ccs power plants leading to a share of 16 in european generation capacity by 2025 with the lowest observed investment costs of 1400 kw but only 2 with the highest of 3000 kw a variation of conversion efficiency between 37 and 44 the minimum and maximum observed values only leads to a 13 15 share variation of ccs equipped power plants these findings are robust for the base case with a co 2 price of 43 t and also for sensitivities with 30 and 20 t co 2 but with a lower effect as the overall share of ccs is significantly reduced at these prices

wind power development in the united states abstract this paper analyzes the drivers of wind power development in the united states focusing on government renewable energy incentives and access to the electricity grid the effects of wind capacity electricity transmission line coverage and grid regulation as well as state and federal subsidies from 1998 to 2007 are estimated via random effects tobit probit and ordinary least squares instrumental variables regression the results indicate that the federal production tax credit state level sales tax credit and production incentives play an important role in promoting wind power in addition higher wind power penetration levels can be achieved by bringing more parts of the electricity transmission grid under independent system operator regulation this paper concludes that state and federal government policies play a significant role in wind power development both by providing financial support and by improving physical and procedural access to the electricity grid

renewable electricity production costs a framework to assist policy makers decisions on price support abstract despite recent progress the production costs for renewable electricity remain above those for conventional power expectations of continuous reductions in production costs typically underpin governments policies for financial support they often draw on the technology focused versions of the experience curve model this paper discusses how national contextual factors also have a strong influence on production costs such as geographic infrastructural institutional and resource factors as technologies mature and as they reach significant levels of diffusion nationally sustained increases in production costs might be recorded due to these nationally contextual factors poorly accounted for in policy making decisions for price support the paper suggests an analytical framework for a more comprehensive understanding of production costs based on this it recommends that the evolution of specific cost levels and factors be monitored to locate sources of changes the paper also suggests policy instruments that governments may use to facilitate cost decreases whenever possible the application of the framework is illustrated for the diffusion of wind power in spain during the past three decades

an overview of co2 cost pass through to electricity prices in europe this paper investigates the link between wholesale electricity prices in europe and the co2 cost i e the price of european union allowances euas over the two first phases of the european union emissions trading scheme eu ets we set up a theoretical framework and an empirical model to estimate to what extent daily fluctuations of co2 costs may have impacted electricity prices regarding estimation results for the first phase of the eu ets about 42 of estimated pass through rates appear to be statistically significant while only one third of them are statistically different from zero in the second phase we try to improve those results by proposing alternative estimates based on the eu ets compliance periods

risk sharing and group decision making in a decision making problem where a group will receive an uncertain payoff which must be divided among the members of the group the ultimate payoff of interest is the vector of individual payoffs received by the members of the group in this paper preferences are quantified in terms of cardinal utility functions for such vectors of payoffs these utility functions can represent preferences concerning equitable and inequitable vectors of payoffs as well as attitudes toward risk the individual utility functions are aggregated to form a group utility function for the vector of payoffs and this latter function is in turn used to generate a group utility function for the overall group payoff and a sharing rule for dividing the group payoff into individual payoffs the resulting group decisions are pareto optimal in utility space properties of the sharing rule and the group utility function are investigated for additive and multilinear group utility functions

reviewing electricity production cost assessments a thorough review of twelve recent studies of production costs from different power generating technologies was conducted and a wide range in cost estimates was found the reviewed studies show differences in their methodologies and assumptions making the stated cost figures not directly comparable and unsuitable to be generalized to represent the costs for entire technologies moreover current levelized costs of electricity methodologies focus only on the producer s costs while additional costs viewed from a consumer perspective and on external costs with impact on society should be included if these results are to be used for planning although this type of electricity production cost assessments can be useful the habit of generalizing electricity production cost figures for entire technologies is problematic cost escalations tend to occur rapidly with time the impact of economies of scale is significant costs are in many cases site specific and country specific circumstances affect production costs assumptions on the cost influencing factors such as discount rates fuel prices and heat credits fluctuate considerably and have a significant impact on production cost results electricity production costs assessments similar to the studies reviewed in this work disregard many important cost factors making them inadequate for decision and policy making and should only be used to provide rough ballpark estimates with respect to a given system boundary caution when using electricity production cost estimates are recommended and further studies investigating cost under different circumstances both for producers and society as a whole are called for also policy makers should be aware of the potentially widely different results coming from electricity production cost estimates under different assumptions

modelling energy technologies in a competitive market abstract energy economic models must predict the mix of energy technologies in competitive energy markets we examine a market composed of several competing technologies with geographically heterogeneous cost distributions an approach for determining both the market share and average market cost of energy produced by these technologies is derived the formalism developed which is based on a conditional least cost distribution function can be used to correct the convertional logit treatment of these quantities in several existing models and to better interpret empirical data in order to determine more realistic cost distribution functions for energy technologies