energy security and renewable electricity trade will desertec make europe vulnerable to the energy weapon abstract solar power imports to europe from the deserts of north africa as foreseen in the desertec concept is one possible way to help decarbonising the european power sector by 2050 however this approach raises questions of threats to european energy security in such an import scenario particularly in the light of increasing import dependency and russia s use of the energy weapon in recent years in this paper we investigate the threat of north african countries using the desertec electricity exports as an energy weapon we develop and use a new model to assess the interdependence the bargaining power symmetry operationalised as costs of a disruption in a future renewable electricity trade between north africa and europe if europe maintains current capacity buffers some demand response capability and does not import much more than what is described in the desertec scenario it is susceptible to extortion and political pressure only if all five exporter countries unite in using the energy weapon europe is not vulnerable to extortion by an export cut from only one country as the european capacity buffers are sufficient to restore the power supply no single exporter country would have sustained bargaining power over europe

the implications of industrial development for diversification of fuels abstract the central role of energy in economic growth and development is substantiated by both theory and data much of the analysis of energy in economics has focused on the study of the aggregate output here we deviate from this approach and study the role of fuel diversification in industrial development we build the energy space describing the space of energy technologies which a country can use in the production of manufacturing goods as countries grow they diversify their industries producing more diverse products over time we show that the process is accompanied by diversification of fuels which countries use in the manufacturing sector in particular countries move in the energy space by adopting novel fuels while their movements can be linked to structural changes in the industry over time countries build unique production capabilities which drives divergence in fuel diversity between countries our results provide insight into the limits of fuel substitution in the manufacturing sector as well as they carry important implications for the assessment of potential reductions in co 2 emissions in the future

measuring the energy security implications of fossil fuel resource concentration abstract economic assessments of the welfare effects of energy insecurity are typically uncertain and fail to provide clear guidance to policy makers as a result governments have had little analytical support to complement expert judgment in the assessment of energy security this is likely to be inadequate when considering multiple policy goals and in particular the intersections between energy security and climate change mitigation policies this paper presents an alternative approach which focuses on gauging the causes of energy insecurity as a way to assist policy making the paper focuses on the energy security implications of fossil fuel resource concentration and distinguishes between the price and physical availability components of energy insecurity it defines two separate indexes the energy security price index espi based on the measure of market concentration in competitive fossil fuel markets and the energy security physical availability index espai based on the measure of supply flexibility in regulated markets the paper illustrates the application of espi and espai with two case studies france and the united kingdom looking at the evolution of both indexes to 2030

oil vulnerability index of oil importing countries abstract this paper assesses the relative oil vulnerability of 26 net oil importing countries for the year 2004 on the basis of various indicators the ratio of value of oil imports to gross domestic product gdp oil consumption per unit of gdp gdp per capita and oil share in total energy supply ratio of domestic reserves to oil consumption exposure to geopolitical oil market concentration risks as measured by net oil import dependence diversification of supply sources political risk in oil supplying countries and market liquidity the approach using the principal component technique has been adopted to combine these individual indicators into a composite index of oil vulnerability such an index captures the relative sensitivity of various economies towards developments of the international oil market with a higher index indicating higher vulnerability the results show that there are considerable differences in the values of individual indicators of oil vulnerability and overall oil vulnerability index among the countries both inter and intraregional

market power analysis for the iranian electricity market the market power problem in iranian electricity market is addressed in this study this paper by using various structural indices of market power and reviewing market results analyzes the intensity of competition in iran s electricity market and examines whether this market is functioning at an appropriate level of efficiency in this article the most well known indices of market power are calculated in two approaches for two different scenarios current situation and future outlook of generation sector s ownership in iran s power industry comparing the results of these scenarios promises more competitive market for the second scenario calculating residual supply index for iran s power market shows despite admissible values of concentration ratios due to supply scarcity during periods when the demand is close to the total available capacity some suppliers can exercise market power even with a relatively small market share the most important price and load indices like weighted average prices and load price duration curves of iranian electricity market during march 2007 march 2008 are also analyzed in this paper these results imply the existence of economic withholding the main limiting factors of competition and significant implemented countermeasures for market power mitigation in iran s electricity market are also mentioned

diversification criteria for power systems abstract growing power demand fuel availability and prices technology changes the environmental impacts of energy consumption the changing regulatory environments and the uncertainties around such elements make the planning for optimal power mix a challenging task the diversity approach is advocated as a most appropriate planning methodology for the optimal energy mix hickey et al 2010 shannon wiener index swi which is the most cited diversity metric has been used to assess power systems diversity mainly from an energy perspective to our best knowledge there is no rigorous justification why energy has been the main variable used in diversification exercises rather than other variables such as capacity we use a stylized power generation framework to show that diversity based on energy or capacity could lead to different outcomes in terms of vulnerability to fuel exposure among others we also introduce a shannon wiener index ratio swir that we believe captures better the diversity of a power system compared to the standard swi

seasonality in dynamic regression models this paper examines the implications of treating seasonality as an unobserved component which changes slowly over time this approach simplifies the specification of dynamic relationships by separating non seasonal from seasonal factors we illustrate this approach using the consumption model of davidson et al 1978 and estimate a stable error correction model between consumption income and prices over the period 1958 92 more generally we argue that autoregressive models are unlikely to successfully model slowly changing seasonality and may confound seasonal effects with the dynamic responses of prime interest our approach can be used in a wide range of cases and we show that there is little loss in efficiency even if seasonality is deterministic

regulation in the european community all governments regulate economic activity in their own countries the single european market will involve a significant transfer of regulatory activity from member states to the european community as well as the initiation of regulatory activity in certain areas that have not previously been subject to regulation at all including the activities of member states themselves as in taxation or the provision of subsidies to industry why should governments wish to make such a transfer of powers what do they have to gain

quantifying the supplier portfolio diversity of embodied energy strategic implications for strengthening energy resilience this paper investigates energy resilience of countries by quantifying the supplier diversification of both direct and embodied energy import in particular we quantify two approaches to diversify a country s supplier portfolio by lowering the dependency on each supplier portfolio diversification and by having embodied energy suppliers that are different from its direct energy suppliers portfolio differentiation we examine possibilities for strategic utilization of embodied energy trade to compensate for low diversity of direct energy trade for three types of fossil resources coal oil and gas we find that the diversity of embodied energy import is much greater than that of direct energy import of the three energy resources coal enables countries to adopt portfolio diversification and portfolio differentiation more than gas and oil our results suggest embodied energy can be considered as a transfer of energy resources across national borders that can directly benefit from the diversity of the world energy production by skipping the limited diversity of the world energy export

the uk consumption boom of the late 1980s aggregate implications of microeconomic evidence two competing explanations of the uk consumer boom in the late 1980s are the financial liberalisation imperfect housing market hypothesis of muellbauer and murphy and the expectations hypothesis of king we use 15 years of family expenditure surveys and cohort analysis to investigate to what extent these two hypotheses agree with observed changes in consumption patterns we find that the housing markets explanation accounts for much of the increase by older cohorts but cannot be reconciled with the marked rise in expenditure levels of younger households a simple simulation exercise shows instead that the expectations hypothesis can generate increases of expenditure by young consumers of the magnitude observed in our data

establishing the role that wind generation may have in future generation portfolios assessing the correct future mix in generation portfolios has become more difficult given the introduction of emission trading schemes the recent fuel price rises and the increasing competitiveness of wind energy this paper combines analysis of generation economics load and wind generation characteristics generation adequacy and plant utilization to gain insight into the role of wind generation in desirable generation portfolios the unique characteristics of wind generation are accounted for in the analysis and sensitivity analysis is carried out with respect to discount rates carbon taxes and various fuel price scenarios results show that for a large range of future scenarios wind generation has a significant role to play in future generation portfolios in ireland mean variance portfolio theory is applied to examine the benefits of portfolio diversification in terms of avoiding exposure to volatile fuel prices analysis shows that wind generation has a further role to play in generation portfolios in this respect

evaluating energy security in the asia pacific region a novel methodological approach this paper establishes an energy security assessment instrument based on a new and expanded conceptualisation of energy security the instrument is a systematic interrogative tool for evaluating energy security of individual states or regions it consists of eleven broad energy security dimensions associated with the current global energy system these energy security dimensions take into account numerous quantitative and qualitative attributes of each country s energy security and policy and include both traditional energy security concerns and many new factors such as environmental socio cultural and technological another dimension largely absent from previous analyses is the existence of and the issues addressed in energy security policy in each country this instrument serves as an assessment system with which to evaluate energy security in the asia pacific region the existing studies on energy security in the asia pacific region suffer from serious limitations no study to date examines regional energy security policies by adopting a more comprehensive energy security definition as a starting point most studies also focus on a single country or issue even if they examine energy security in major regional economies they lack critical comparative analysis the instrument is valuable as it may be utilised to draw a comprehensive map of regional energy security situation which can also include comparative analysis of energy security characteristics across the asia pacific region ultimately it may be utilised to set up a framework for improved regional energy cooperation with the aim of providing regional leaders with a blueprint for improving regional energy security and policy

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

the challenging economics of energy security ensuring energy benefits in support to sustainable development abstract energy is a key resource to economic development and is required to be available continuously and in adequate amounts also it is expected to be affordable and environmentally friendly ensuring this is a challenge yet strategic to maintain economies running under a sustainable pattern energy security is neither a new concept nor a new concern however because of new issues it requires a novel broader approach such an approach should address both demand security of supply and supply security of demand sides as well as take into account energy scarcity situations and surplus opportunities in addition it should allow for both private markets and public policies and regulations initiatives this paper presents a theoretical and practical basis for the economics of energy security energy security is defined in this context as the ability of an economy to provide sufficient affordable and environmentally sustainable energy services so as to maintain a maximum welfare state even when issues would press it otherwise we introduce the notion of energy security gap to represent the economy s failure to show such ability additionally we also propose a framework to support the evaluation planning and implementation of energy security in an economy this framework relies on the concepts of resilience adaptability and transformability walker et al 2004 to prescribe indicators to assess the energy security of an economy furthermore it proposes mechanisms to enhance energy security as well as a continuous process to increasingly achieve this

carbon trading in the policy mix the kyoto protocol is stimulating the development of emissions trading schemes at the national and international levels these are being introduced alongside existing policy instruments such as carbon taxes and negotiated agreements leading to complex problems of policy interaction but the topic of policy interaction remains under researched this paper aims to improve understanding of such interactions by examining the conditions under which a cap and trade scheme for carbon dioxide emissions may usefully coexist with carbon energy taxes support mechanisms for renewable electricity and policies to promote energy efficiency the paper argues that each of these instrument combinations may be acceptable provided they contribute to either improving the static or dynamic efficiency of the trading scheme or delivering other valued policy objectives but since the coexisting instruments may raise overall abatement costs while contributing nothing further to emission reductions the objectives and trade offs within the policy mix must be explicit

diversity and security in uk electricity generation the influence of low carbon objectives abstract we explore the relationship between low carbon objectives and the strategic security of electricity in the context of the uk electricity system we consider diversity of fuel source mix to represent one dimension of security robustness against interruptions of any one source and apply two different diversity indices to the range of electricity system scenarios produced by the uk government and independent researchers our results show that low carbon objectives are uniformly associated with greater long term diversity in uk electricity generation with reference to data on wind generation we also consider the impact of source variability on a second dimension of security the reliability of generation availability we conclude that this does not undermine our fundamental conclusion that low carbon scenarios are associated with greater strategic security of supply in uk electricity we discuss reasons for this result explore sensitivities and briefly discuss possible policy instruments associated with diversity and their limitations

resilience and electricity systems a comparative analysis electricity systems have generally evolved based on the natural resources available locally few metrics exist to compare the security of electricity supply of different countries despite the increasing likelihood of potential shocks to the power system like energy price increases and carbon price regulation this paper seeks to calculate a robust measure of national power system resilience by analysing each step in the process of transformation from raw energy to consumed electricity countries with sizeable deposits of mineral resources are used for comparison because of the need for electricity intensive metals processing we find that shifts in electricity intensive industry can be predicted based on countries power system resilience

energy security and sustainability in northeast asia abstract energy security has typically to those involved in making energy policy meant mostly securing access to oil and other fossil fuels with increasingly global diverse energy markets however and increasingly transnational problems resulting from energy transformation and use old energy security rationales are less salient and other issues including climate change and other environmental economic and international considerations are becoming increasingly important as a consequence a more comprehensive operating definition of energy security is needed along with a workable framework for analysis of which future energy paths or scenarios are likely to yield greater energy security in a broader more comprehensive sense work done as a part of the nautilus institute s pacific asia regional energy security pares project developed a broader definition of energy security and described an analytical framework designed to help to compare the energy security characteristics both positive and negative of different quantitative energy paths as developed using software tools such as the leap long range energy alternatives planning system

reinterpreting the dhsy 1978 consumption function with hindsight the justification for davidson hendry srba and yeo s dhsy s selection of their favoured equation is shown to be based upon contradicting assumptions about inflation the empirically supported model is argued not to have a theoretically justified error correction interpretation the exclusion of the intercept biases the error correction term such that it becomes significant and negative but undermines the theoretical plausibility of the long run target more generally the statistical need to include an intercept in any regression to avoid parameter bias is demonstrated the rise in inflation in the 1970s is not considered to be a credible explanation of the fall in the average propensity to consume apc from the 1950s and is shown to have questionable empirical support when a below unit income elasticity is allowed for the recent articles which have found support for dhsy s favoured formulation augmented by time varying parameters using the most contemporary uk data should be viewed with caution new interpretations for the dhsy model s persistent success are called for if it is not to be considered that dubious regressions have been resurrected

capital budgeting under uncertainty an extended goal programming approach mathematical programming techniques have long been recognized as the most suitable approach to the complex problem of capital budgeting in corporations this is because contrary to conventional single project appraisal techniques such as the net present value method financial planners do not normally engage in project by project analysis to determine the projects that would be included in capital budgets in addition the existing chance constrained both single and multiple objectives models developed to deal with the problem of uncertainty in capital budgeting are grossly defective since they indeed address the problem of risk rather than uncertainty this paper presents an extended goal programming methodology to address the problem of capital budgeting under uncertainty to overcome the defects of chance constrained capital budgeting models in particular since financial planners frequently deal with the complex problem of capital budgeting by aggregating large numbers of small investment proposals into families of large projects the paper presents necessary and sufficient conditions for the acceptance of a set of investment projects by a business enterprise the results indicate that under uncertainty firms faced with capital rationing are less economically efficient than others that are not so faced also the results show that optimal allocation policy under uncertainty requires the actual discount rate to be greater than the market cost of capital a finding which is consistent with corporate finance practice

limits to the value of external costs based on recent insights from the field of risk analysis this paper examines some of the difficulties encountered in attempts to characterise the environmental effects of energy options as monetary externalities more than 20 different dimensions of environmental appraisal are identified and discussed in relation to the historic literature on risk assessment and a number of recent influential environmental valuation studies a survey is conducted of the results obtained over more than a decade for the external environmental costs of electricity supply options theoretical and methodological criticisms are lent support by the finding that environmental valuation results vary over a very wide range of values yielding a variety of rank orderings for the different generating options in addition the values derived for energy externalities are found to be vulnerable to the possible influence of a price imperative the paper concludes by pointing to approaches to the social appraisal of generating technologies which offer greater transparency rigour and accessibility in addressing plural and intrinsically subjective value judgements concerning the different forms and dimensions of environmental effects

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

indicators of energy security in industrialised countries energy security has become a popular catch phrase both in the scientific arena as well as in the political discussion yet in general the applied concepts of energy security are rather vague this paper sheds some light on concepts and indicators of energy security first we conceptually discuss the issue of energy supply security and explain why it is not to handle by one science alone and what economics may contribute in order to structure the topic after providing a brief survey of existing attempts to define or measure energy security we suggest an additional dimension along which indicators of energy security may be classified ex post and ex ante indicators finally we illustrate our concept on the basis of several simplified indicators while ex post indicators are mostly based on price developments ex ante indicators are to a greater extent aimed at illustrating potential problems our illustration suggests that it is worthwhile to take into account the market structure along with the political stability of exporting countries

optimal savings distortions with recursive preferences abstract this paper derives an intertemporal optimality condition for economies with private information focusing on a class of recursive preferences by comparing it to the situation where agents can freely save in a risk free asset market we derive the optimal savings distortions necessary for constrained optimality our recursive preferences are homogeneous and satisfy a balanced growth condition while allowing us to separate the role of risk aversion and intertemporal elasticity of substitution we perform some quantitative exercises that disentangle the respective roles played by these two parameters in optimal distortions and the implied welfare gains

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

an investigation of the long run properties of aggregate non durable consumers expenditure in the united this paper estimates the effects of the modeling of nondurable consumption in the light of the five years of new data since the publication of the paper by j e h davidson et al 1978 and the development of the new cointegration technique of r f engle and c w j granger 1987 existing models are found to be inadequate on two grounds they fail parameter stability tests and they do not contain a suitable equilibrium specification the paper uses the cointegration approach to search for an encompassing model that is both stable and cointegrates the main finding is that the analysis must be extended to allow for differential income effects caused by changing higher rate income tax bands copyright 1989 by royal economic society

energy security under de carbonization scenarios an assessment framework and evaluation under different technology and policy choices abstract how would a low carbon energy transformation affect energy security this paper proposes a framework to evaluate energy security under long term energy scenarios generated by integrated assessment models energy security is defined as low vulnerability of vital energy systems delineated along geographic and sectoral boundaries the proposed framework considers vulnerability as a combination of risks associated with inter regional energy trade and resilience reflected in energy intensity and diversity of energy sources and technologies we apply this framework to 43 scenarios generated by the message model as part of the global energy assessment including one baseline scenario and 42 low carbon scenarios where the global mean temperature increase is limited to 2 c over the pre industrial level by and large low carbon scenarios are associated with lower energy trade and higher diversity of energy options especially in the transport sector a few risks do emerge under low carbon scenarios in the latter half of the century they include potentially high trade in natural gas and hydrogen and low diversity of electricity sources trade is typically lower in scenarios which emphasize demand side policies as well as non tradable energy sources nuclear and renewables while diversity is higher in scenarios which limit the penetration of intermittent renewables

fuel mix diversification incentives in liberalized electricity markets a mean variance portfolio theory approach monte carlo simulations of gas coal and nuclear plant investment returns are used as inputs of a mean variance portfolio optimization to identify optimal base load generation portfolios for large electricity generators in liberalized electricity markets we study the impact of fuel electricity and co2 price risks and their degree of correlation on optimal plant portfolios high degrees of correlation between gas and electricity prices as observed in most european markets reduce gas plant risks and make portfolios dominated by gas plant more attractive long term power purchase contracts and or a lower cost of capital can rebalance optimal portfolios towards more diversified portfolios with larger shares of nuclear and coal plants

diversity and ignorance in electricity supply investment addressing the solution rather than the problem the need for diversity has been cited as a rationale for important recent investment decisions in the uk electricity supply sector it is invoked as the principal argument for continuing major government intervention yet there exists no formal analytical basis for the concept why is diversity good what is meant by diversification what is it that must be diversified what trade off should be struck between diversity and other measures of performance the resulting ambiguity causes confusion and is vulnerable to special pleading despite this this paper argues that diversification offers a superior alternative to probabilistic approaches towards uncertainty and ignorance in electricity supply investments and proposes a formal analytical approach a quantitative index of diversity is borrowed from information theory and used to derive a value for the government s implicit willingness to pay for diversity in the uk electricity supply mix this is then applied in a pilot exercise to the problem of optimizing the diversity and financial performance of the supply portfolio although provisional the results are relevant to the government s forthcoming nuclear review particularly in assessing the relative levels of support for nuclear power and renewable energy

fossil fuel dependence and vulnerability of electricity generation case of selected european countries abstract this paper analyses the diversity of fuel mix for electricity generation in selected european countries and investigates how the fuel bill has changed as a share of gdp between 1995 and 2005 the drivers of fuel dependence related vulnerability are determined using laspeyres index decomposition a what if analysis is carried out to analyse the changes in the vulnerability index due to changes in the drivers and a scenario analysis is finally used to investigate the future vulnerability in the medium term the paper finds that the british and the dutch electricity systems are less diversified compared to three other countries analysed the gas dependence of the dutch and italian systems made them vulnerable but the vulnerability increased in all countries in recent years gas price and the level of dependence on gas for power generation mainly influenced the gas vulnerability the united kingdom saw a substantial decline in its coal vulnerability due to a fall in coal price and coal dependence in electricity generation the scenario analysis indicates that uk is likely to face greater gas vulnerability in the future due to increased gas dependence in electricity generation and higher import dependence

dynamic optimal taxation with private information we study dynamic optimal taxation in a class of economies with private information optimal allocations in these environments are complicated and history dependent yet we show that they can be implemented as competitive equilibria in market economies supplemented with simple tax systems the market structure in these economies is similar to that in bewley 1986 agents supply labour and trade risk free claims to future consumption subject to a budget constraint and a debt limit optimal taxes are conditioned only on two observable characteristics an agent s accumulated stock of claims or wealth and her current labour income we show that optimal taxes are generally non linear and non separable in these variables and relate the structure of marginal wealth and income taxation to the properties of agent preferences this paper studies optimal taxation in a class of dynamic economies with private information we consider an environment in which agents preferences are defined over consumption and labour and each agent receives a privately observed sequence of i i d preference shocks incentivecompatibility constraints stemming from private information imply that socially optimal or constrained efficient allocations in this environment are complicated and history dependent yet we show that they can be implemented as competitive equilibria in market economies supplemented with simple tax systems the market structure in these economies is identical to that in bewley 1986 huggett 1993 or aiyagari 1994 agents can trade current consumption for claims to future consumption subject to a budget constraint and a borrowing limit these claims have a non contingent pre tax return crucially taxes are conditioned upon only two observable characteristics of an agent current wealth given by the agent s accumulated stock of claims and current labour income they do not depend on any other aspect of an agent s past history most models of dynamic optimal taxation follow the ramsey approach in which the set of fiscal instruments available to the government is exogenously specified 1 linear labour and capital income taxes are typically included in this set while lump sum taxes are ruled out the exclusion of the latter is justified by appealing to incentive or administrative constraints but these are not explicitly modelled these exogenous restrictions on fiscal instruments represent frictions that the government seeks to ameliorate through its optimal choice of tax rates the approach we adopt in this paper builds on the optimal taxation literature initiated by mirrlees 1971 mirrlees assumes that agents receive privately observed shocks to their

the economics of distributed energy generation a literature review the uk electricity system is likely to face dramatic technical and institutional changes in the near future current uk energy policy focuses on the need for a clean affordable and secure energy supply decentralisation of the electricity system is recognised as one means of achieving efficient and renewable energy provision as well as addressing concerns over ageing electricity infrastructure and capacity constraints in this paper we provide a critical literature review of the economics of increased penetration of distributed energy generation we find that there exists a large volume of research considering the financial viability of individual distributed generation technologies and we are necessarily selective in our review of these studies given the wide variety of technologies that the definition of distributed generation encompasses however there are few studies that focus on the pure economics of individual or groups of distributed energy generators and even fewer still based on the economy wide aspects of distributed generation in view of this gap in the literature we provide suggestions for future research which are likely to be necessary in order adequately to inform public policy on distributed generation and its role in the future of uk energy supply

determinants of renewable energy development in the eu countries a 20 year perspective abstract the objective of the paper is to identify factors which determine energy policy in the eu countries in the middle of 1990s this objective is achieved in three stages first the changes in the distribution of res in 26 eu countries in the period between 1995 and 2014 are investigated the analysis demonstrates that over the last 20 years the eu countries diversify the res they use which results in substantial changes in their distribution second the distribution of energy sources in 1995 is described as it is assumed that the distribution might be a crucial factor influencing energy policy in each country third several other factors related to energy security environmental concerns economy and politics are considered as potential determinants of renewable energy development two statistical methods of variable selection namely the best subset regression and the lars method reveal that the present in 2014 share of res in the energy mix significantly depends on the condition of the eu countries in the middle of 1990s the distribution of energy sources in 1995 is the crucial determinant of renewable energy development countries without their own fossil fuel sources are the ones which develop renewable energy to the greatest extent other important factors boosting re development include gdp per capita concentration of energy supply swi and the costs of consumption of energy obtained from fossil fuels in relation to gdp

introduction to the asian energy security project project organization and methodologies the spectacular recent economic growth in the asia pacific region in general and in many of the economies of northeast asia in particular has spurred a vast expansion in the need for energy services and an expansion in the demand for the fuels that help to supply these services future projections suggest that the growth of fossil fuel use in northeast asia especially in china will have major consequences for financial and fuel markets and pollution both regionally and globally before the project described in this paper was initiated there was no ongoing forum for energy experts from all of the countries of the region to meet informally and in an unofficial capacity to discuss openly and in a targeted fashion the energy situations in their countries and to work together to evaluate the energy efficiency costs and benefits of different ways of meeting regional demand the asian energy security aes project provides such a forum and as such constitutes a unique resource in the engagement of the countries of northeast asia on the topic of energy security

evolutionary policies for sustainable development adaptive flexibility and risk minimising abstract an evolutionary perspective on policies to foster sustainable development is presented it is argued that policies suggested by the traditional economic theory of environmental policy can stimulate unsustainable socio economic structures and patterns in addition they are unable to remove undesired locked in systems and technologies drawing on evolutionary thinking characterised by diversity selection innovation path dependence and bounded rationality an alternative partly complementary theory of environmental policy is suggested specific attention is given to the role of strategies that are aimed at increasing diversity and adaptive flexibility and at reducing risk

long term energy services security what is it and how can it be measured and valued abstract the paper reviews some recent approaches towards measuring the extent of long term energy security and security externality valuation it starts out to discuss the contextual connotations of notions of energy security in medium to long term time frames and reviews some indicators that have been proposed to quantify it special attention is paid to two of these approaches which the authors helped to develop i e diversity based indices and the supply demand index the paper takes issue with conventional welfare economic approaches that neglect i the scope on the demand side for raising security and ii negative feedback mechanisms of socio political impacts of international rent transfers in fossil fuels exporting countries the concept of energy services security is proposed with a demand side focus this enables application of an integrated approach to gauge the resilience of a society to meet the needs of its population for energy services over longer timescales ahead from various interrelated perspectives propositions are made on the attribution of security externalities to the use of fossil fuels policies and suggestions for further improvements of measures for energy services security

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

forecasting aggregate consumers expenditure in the u k using the dhsy model the performance of the dhsy model in predicting the growth of aggregate consumers expenditure in the uk over the period 1985 1988 is examined the model is applied to four different combinations of consumption variable and data type results show in all cases the predictive performance of the dhsy model to be poor however applied to seasonally adjusted data an improvement can be achieved by allowing for systematic variation in coefficients in particular a variable coefficient dhsy model displays no tendency to underpredict the growth of total consumers expenditure and accurately captures the volatility of non durable expenditure

indicators for energy security the concept of energy security is widely used yet there is no consensus on its precise interpretation in this research we have provided an overview of available indicators for long term security of supply sos we distinguished four dimensions of energy security that relate to the availability accessibility affordability and acceptability of energy and classified indicators for energy security according to this taxonomy there is no one ideal indicator as the notion of energy security is highly context dependent rather applying multiple indicators leads to a broader understanding incorporating these indicators in model based scenario analysis showed accelerated depletion of currently known fossil resources due to increasing global demand coupled with increasing spatial discrepancy between consumption and production international trade in energy carriers is projected to have increased by 142 in 2050 compared to 2008 oil production is projected to become increasingly concentrated in a few countries up to 2030 after which production from other regions diversifies the market under stringent climate policies this diversification may not occur due to reduced demand for oil possible benefits of climate policy include increased fuel diversity and slower depletion of fossil resources

examining the resilience of national energy systems measurements of diversity in production based and consumption based electricity in the globalization of trade networks abstract energy is a critical component of achieving sustainable development in addition to the three aspects of promoting access renewables and efficiency the dimension of resilience in energy systems should also considered the implementation of resilient energy systems requires a quantitative understanding of the socio economic practices underlying such systems specifically in line with the increasing globalization of trade there remains a critical knowledge gap on the link between embodied energy in the production and consumption of traded goods to bridge this knowledge gap we investigate the resilience of global energy systems through an examination of a diversity measure of global embodied electricity trade based on multi regional input output mrio networks the significance of this research lies in its ability to utilize high resolution mrio data sets in assessing the resilience of national energy systems this research indicates that secure and responsible consumption requires the diversification of not only energy generation but also energy imports this research will lay the ground for further research in the governance of resilience in global energy networks

diversification of oil import sources and energy security a key strategy or an elusive objective this paper explores the relationship between the diversification of sources of imported oil and energy security of oil importing countries it examines the importance of diversification policy for oil importers explains why oil importers implement oil diversification policy and contextualizes the oil import diversification strategy in the overall energy security policy of oil importers the paper analyzes the factors and the contexts that affect the level of importance assigned to oil import diversification policy in oil importing countries and the limitations that may affect the successful implication of oil import diversification policy the examples are drawn from the world s top three oil importers the united states japan and china the policymakers in these and other oil importing countries place much importance on energy security the diversification of oil import sources is used as one of the strategies to enhance energy security in oil importing countries this paper is important for policymakers in oil importing countries as it provides them with a qualitative conceptual framework with which to evaluate the need to diversify their countries sources of imported oil and with which to identify the likely limitations to the successful implementation of oil import diversification policy

addressing india s energy security and options for decreasing energy dependency abstract energy plays the most vital role in the economic growth and security of any nation future economic growth crucially depends on the long term availability of energy from sources that are affordable accessible and environmental friendly acute energy scarcity in india in recent years is hampering its industrial growth and economic progress india is strongly dependent on the fossil fuels for its energy requirements which are also contributing significantly to greenhouse gases emissions it is proposed that the introduction of renewable energy sources portfolio to the future energy mix and diversification of fuel sources will i enhances energy security and mitigates co 2 emission and ii improves the quality of life if india failed to protect its environment not only its economic growth would be impeded but also would pose serious health hazards

efficient allocations with hidden income and hidden storage we consider an environment in which individuals receive income shocks that are unobservable to others and can privately store resources we provide a simple characterization of the unique efficient allocation of consumption in cases in which the rate of return on storage is sufficiently high or alternatively in which the worst possible outcome is sufficiently dire we show that unlike in environments without unobservable storage the symmetric efficient allocation of consumption is decentralizable through a competitive asset market in which individuals trade riskfree bonds among themselves in this paper we consider an environment in which individuals have random income and can accumulate assets through a storage technology their income realizations and their asset position are private information given these informational frictions we provide a simple characterization of the unique efficient allocation of consumption in cases in which the rate of return on storage is sufficiently high or alternatively in which the worst possible outcome is sufficiently dire we show that the symmetric efficient allocation of consumption is decentralizable through a competitive asset market in which individuals trade risk free bonds among themselves there is a large prior literature which examines the characteristics of efficient risksharing in dynamic settings in the presence of private information unlike our paper this literature generally finds that efficient allocations do not coincide with the equilibrium allocations of any economy with a competitive bond market see atkeson and lucas 1992 in particular the key difference between our paper and these preceding ones is that the earlier literature assumes either that agents cannot accumulate resources over time or that if they can this accumulation is observable in contrast we assume that both agents incomes and their stored resources are private information it is this combination of assumptions that leads to our result our findings are reminiscent of allen s 1985 he considers a dynamic principalagent relationship in which the agent is risk averse and has hidden stochastic income the

vulnerability of the economy to the potential disturbances of energy supply a logic based model with application to the case of china the disturbances of energy supply that may result from both external and domestic events create a significant threat for national economy due to potential impacts on the productivity employment and overall economic growth building scenarios of the economy s vulnerability to these disturbances is delicate because of the significant number of interrelated factors that should be taken into consideration in this paper a logic based model lbm is developed which allows for defining exploring and assessing the determinants and the indicators of the economy s vulnerability related to the energy supply disturbances within a coherent scenarios assessment framework the proposed model is illustrated with the case of china after developing the general framework three particular scenarios are investigated based on the case study the performance and limitations of the model are analyzed and its ability to evaluate national energy policies is discussed finally some recommendations for further improvements are made

conceptualizing energy security abstract energy security 1 is one of the main targets of energy policy however the term has not been clearly defined which makes it hard to measure and difficult to balance against other policy objectives we review the multitude of definitions of energy security they can be characterized according to the sources of risk the scope of the impacts and the severity filters in the form of the speed size sustention spread singularity and sureness of impacts using a stylized case study for three european countries we illustrate how the selection of conceptual boundaries along these dimensions determines the outcome this can be avoided by more clearly separating between security of supply and other policy objectives this leads us to the definition of energy security as the continuity of energy supplies relative to demand

valuing diversity in energy supply abstract there is renewed interest in the role of supply diversity in promoting energy security this paper explores ways of valuing diversity a possible incentive mechanism for promoting diversity which takes account of underlying disparities between different technology options is developed the mechanism provides a way of trading off cost and diversity and results in an efficient cost diversity frontier by analogy with financial portfolio theory if all technologies are believed to be equally disparate the appropriate mechanism is a levy imposed on market share if the technologies are not equally disparate the levy needs to be adjusted by technology specific multipliers that take account of levels of disparity and patterns of market share the analysis is applied to two stylised situations in the long run equilibrium case the implications of both different patterns of disparity and different values attached to diversity are investigated the paper also explores the implications of applying such a mechanism to the current great britain electricity system the implications in terms of financial flows for both the market as a whole and for individual operators are investigated finally the appropriateness of such a mechanism in the light of other policy goals and possible future research directions is discussed

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

issues in the determination of the optimal portfolio of electricity supply options abstract in recent years a growing amount of attention has been focused on the need to develop a cost effective portfolio of electricity supply options that provides society with a measure of protection from such factors as fuel price volatility and supply interruptions a number of strategies including portfolio theory real options theory and different measures of diversity have been suggested in this paper we begin by first considering how we might characterize an optimal portfolio of supply options and identify a number of constraints that must be satisfied as part of the optimization process we then review the strengths and limitations of each approach listed above the results of our review lead us to conclude that of the strategies we consider using the concept of diversity to assess the viability of an electricity supply portfolio is most appropriate we then provide an example of how a particular measure of diversity the shannon weiner index can be used to assess the diversity of the electricity supply portfolio in the state of illinois the region served by the midwest independent system operator miso and the continental united states

distributed generation and distribution market diversity in europe the unbundling of the electricity power system will play a key role on the deployment of distributed generation dg in european distribution systems evolving towards smart grids the present paper firstly reviews the relevant european union eu regulatory framework specific attention is paid to the concept of unbundling of power distribution sector in europe afterwards the focus is on the current state of penetration of dg technologies in the eu member states and the corresponding interrelations with distribution features a comparison between the unbundling of the distribution and supply markets using econometric indicators such as the herfindahl hirschmann ihh and the shannon wiener isw indices is then presented finally a comparative analysis between these indices and the current level of penetration of distributed generation in most eu is shown policy recommendations conclude the paper

energy diversity and development in economic systems an empirical analysis abstract as economic systems develop over time they tend to become more complex with more structure and greater throughputs assuming favorable conditions energy use increases as more economic sectors develop and more channels for flow are opened economic diversity as measured by the number of economic sectors using energy and the equatability of flows between them generally increases as diversity increases the efficiency of generating outputs with a given amount of energy also increases development capacity the product of system energy throughput and diversity of flows is a measure of the potential system output and is calculated for selected countries capacity changes over time are shown to relate to changes in economic output in selected countries two distinct development strategies become evident one which promotes energy use and one which emphasizes diversity and the sustainability of each is examined while most countries utilize a mix of the two developing countries generally rely more on increasing energy use to increase output while developed countries tend to become more diverse as a means of increasing outputs sustainability is enhanced by strategies which promote diversity and resource use efficiency in economic systems

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