Electricity wholesale market prices in Europe: Convergence?

This paper tests the hypothesis that the ongoing restructuring process in the European electricity sector has led to a common European market for electricity. Based on a Principal Component Analysis (PCA) of wholesale electricity prices in 2002–2006, we reject the assumption of full market integration. For several pairs of countries, the weaker hypothesis of (bilateral) convergence is accepted based on unit root tests (KPSS and ADF) and a convergence test based on filtered pairwise price relations. This indicates that the efforts to develop a single European market for electricity were so far only partially successful. We show that the daily auction prices of scarce cross-border transmission capacities are insufficient to explain the persistence of international price differentials. Empirically, our findings confirm the insufficiency of explicit capacity auctions as stated in the theoretical literature.     

The impacts of energy prices on energy intensity: Evidence from China

In this paper, we present a review of the deregulation of energy prices in China between 1985 and 2004 and assess the impacts of changes in energy prices on aggregate energy intensity and coal/oil/electricity intensity. We used time series data to provide estimates of energy price elasticities. Empirical results showed that: (1) The own-price elasticities of coal, oil, and aggregate energy were negative in periods both before and after 1995, implying that higher relative prices of different energy types lead to the decrease in coal, oil, and aggregate energy intensities. However, the positive own-price elasticity of electricity after 1995 probably indicates that the price effect was weaker than other factors such as income effect and population effect. (2) The impacts of energy prices were asymmetric over time. (3) Sectoral adjustment also drove the decrease in aggregate energy intensity. Although raising energy prices to boost efficiency of energy use seems to be an effective policy tool, other policy implications concerned with energy prices, such as energy supply security and fuel poverty, must also be considered.     

New scenario of the non-conventional renewable energies on Chile after the incentives created on the “Short Law I”

Non-conventional renewable energies have never played an important role in the Chilean energy generation system, mainly due to the economic barriers that actually exists on our country for the inclusion of these kinds of technologies. Nevertheless, the use of renewable energy system technologies have started to be an interesting issue for the Chilean government, and for that reason, the last modification of the Energy Law during 2004, usually known as “Short Law I”, introduced the first direct incentive to renewable energy generation (specifically in the art. 71-7).In this work we analyze in detail the modification on the electric law we mentioned before, especially for geothermal and wind power generation, and we compare the economic incentive generated with the new law and the differences between the real energy costs using renewable energy systems technologies and the current energy price in Chile. It is clear from the analysis that the total incentives do not cover more than 8.3% of the price differences between incomes and costs.     

Energy consumption,economic growth and prices: A reassessment using panel VECM for developed and developing countries

This paper reinvestigates the energy consumption–GDP growth nexus in a panel error correction model using data on 20 net energy importers and exporters from 1971 to 2002. Among the energy exporters, there was bidirectional causality between economic growth and energy consumption in the developed countries in both the short and long run, while in the developing countries energy consumption stimulates growth only in the short run. The former result is also found for energy importers and the latter result exists only for the developed countries within this category. In addition, compared to the developing countries, the developed countries’ elasticity response in terms of economic growth from an increase in energy consumption is larger although its income elasticity is lower and less than unitary. Lastly, the implications for energy policy calling for a more holistic approach are discussed.     

Energy prices,labour productivity and causality: An empirical examination

This paper is directed at examining the impact of changing energy prices on productivity in the USA. By using a cross correlation test for unidirectional causality, it is clearly demonstrated that for the period 1947–1980, the rate of change of productivity was adversely affected by changing energy prices. Furthermore, there is at least a four to five year lag before the entire impact is exhausted.     

Inflation controlled by energy prices

The inflation experienced in the world economy over the last decade could have been considerably reduced if the world had been less dependent upon energy imports. Reduction of imports by an average of half reduces worldwide inflation by more than 30%. Countries supplying their own energy may benefit by having lower inflation than energy importing countries. A low inflation rate is most easily achieved if the price of domestically produced energy follows the national price index. In most countries some alternative energy sources may be competitive to imported energy when all the economic benefits of domestic energy production are taken into consideration.     

How the removal of energy subsidy affects general price in China: A study based on input–output model

In China, most energy prices are controlled by the government and are under-priced, which means energy subsidies existing. Reforming energy subsidies have important implications for sustainable development through their effects on energy price, energy use and CO₂ emission. This paper applies a price-gap approach to estimate China's fossil-fuel related subsidies with the consideration of the external cost. Results indicate that the magnitude of subsidies amounted to CNY 1214.24 billion in 2008, equivalent to 4.04% of GDP of that year. Subsidies for oil products are the largest, followed by subsidies for the coal and electricity. Furthermore, an input–output model is used to analyze the impacts of energy subsidies reform on different industries and general price indexes. The findings show that removal of energy subsidies will have significant impact on energy-intensive industry, and consequently push up the general price level, yet with a small variation. Removing oil products subsidies will have the largest impact, followed by electricity, coal and natural gas. However, no matter which energy price increases, PPI is always the most affected, then GDP deflator, with CPI being the least. Corresponding compensation measures should be accordingly designed to offset the negative impact caused by energy subsidies reform.     

Evaluation of retrofitting gas-fired cooling and heating systems into BCHP using design optimization

The influence of energy prices on the feasibility of a retrofit is investigated. The retrofit describes the conversion of a system from HVAC to BCHP for energy-saving. This includes two optimal retrofit design models, of which the exergetic efficiency and annual costs (AC) are the separate objective functions. The retrofit scheme is planned to insert gas engines as prime movers into the original system, which have adopted gas-fired absorption chillers. The solutions of the optimizations show that such a retrofit can result in a remarkable rise in exergetic efficiency but is not viable with current energy prices. The contradictory solutions reveal a gap between the current energy prices system of the country and the present energy situation. Further investigation gives the critical lines of which each divides the coordinate plane of natural gas–electric prices into two parts of benefit and deficit. If the electric price rises to a certain extent, the retrofit will be advantageous both in benefit and energy-saving. So it is really an urgent task to reform the energy prices system in China. Conclusions may be helpful for other similar retrofit projects, and for legislators and the government which are responsible for improving the energy market in China.     

英国能源政策的抉择与后果

英国政府最近公布的能源法案为我们提供了一个了解该国能源政策走向及其潜在影响的机会。笔者认为能源政策的困难,在于现代能源系统必须满足多方面的不同要求,并且必须在不确定的动态环境下实现这一点。这意味着拥有更多的政策选项非常重要。如果你不知道天然气价格的走向,就不要建立以其为基础的能源系统。你需要做的是去投资那些可以增加灵活度的技术选项:如能源效率,智能电网,需求侧管理,储能技术,跨国电网和电动汽车。尽管这些技术可能目前表面看起来成本效益并不是最大化的,但是,他们提供了灵活适应未来能源系统条件的机会。     

European wood pellet market integration - A study of the residential sector

The integration of European energy markets is a key goal of EU energy policy, and has also been the focal point of many scientific studies in recent years. International markets for coal, oil, natural gas and electricity have previously been investigated in order to determine the extent of the respective markets. This study enhances this field of research to bioenergy markets. Price series data and time series econometrics are used to determine whether residential sector wood pellet markets of Austria, Germany and Sweden are integrated. The results of the econometric tests show that the German and Austrian markets can be considered to be integrated, whereas the Swedish market is separate from the other two countries. Although increased internationalization of wood pellet markets is likely to contribute to European price convergence and market integration, this process is far from completed.     

Struggling between resources-based and sustainable development schemes—An analysis of Egypt's recent energy policy

This paper discusses Egypt's recent energy sector and policy developments against objectives and issues of the energy policy strategy adopted in 2007. It reviews energy supply and demand, pricing and subsidies as well as institutional arrangements and respective reform projects from the perspective of assessing achievements. It identifies the consequences of the policy and the long-term outlook and reports on the internal policy struggle.     

The peak of oil production—Timings and market recognition

Energy is essential for present societies. In particular, transportation systems depend on petroleum-based fuels. That world oil production is set to pass a peak is now a reasonably accepted concept, although its date is far from consensual. In this work, we analyze the true expectations of the oil market participants about the future availability of this fundamental energy source. We study the evolution through time of the curves of crude oil futures prices, and we conclude that the market participants, among them the crude oil producers, already expect a near-term peak of oil production. This agrees with many technical predictions for the date of peak production, including our own, that point to peak dates around the end of the present decade. If this scenario is confirmed, it can cause serious social and economical problems because societies will have little time to perform the necessary adjustments.     

Dynamic cyclical comovements of oil prices with industrial production,consumer prices,unemployment, and stock prices

This paper examines the empirical relationship between oil prices and several key macroeconomic variables. In particular, we investigate the cyclical comovements of crude oil prices with output, consumer prices, unemployment, and stock prices. The methodology involves the use of the Hodrick–Prescott [Hodrick, R.J., Prescott, E.C., 1980. Post-War US Business Cycles: An Empirical Investigation. Working Paper, Carnegie Mellon University] and Baxter–King [Baxter, M., King, R.G., 1999. Measuring business cycles: approximate band-pass filters for economic time series. Review of Economics and Statistics 81, 575–593] filters, as well as the recently developed full-sample asymmetric Christiano–Fitzgerald [Christiano, L.J., Fitzgerald, T.J., 2003. The band pass filter. International Economic Review 44, 435–465] band-pass filter. Contemporaneous and cross-correlation estimates are made using the stationary cyclical components of the time series to make inference about the degree to which oil prices move with the cycle. Besides documenting a number of important cyclical relationships using three different time series filtering methods, the results suggest that crude oil prices are procyclical and lag industrial production. Additionally, we find that oil prices lead consumer prices.     

Effects of stochastic energy prices on long-term energy-economic scenarios

In view of the currently observed energy prices, recent price scenarios, which have been very moderate until 2004, also tend to favor high future energy prices. Having a large impact on energy-economic scenarios, we incorporate uncertain energy prices into an energy systems model by including a stochastic risk function. Energy systems models are frequently used to aid scenario analysis in energy-related studies. The impact of uncertain energy prices on the supply structures and the interaction with measures in the demand sectors is the focus of the present paper.

For the illustration of the methodological approach, scenarios for four EU countries are presented. Including the stochastic risk function, elements of high energy price scenarios can be found in scenarios with a moderate future development of energy prices. In contrast to scenarios with stochastic investment costs for a limited number of technologies, the inclusion of stochastic energy prices directly affects all parts of the energy system. Robust elements of hedging strategies include increasing utilization of domestic energy carriers, the use of CHP and district heat and the application of additional energy-saving measures in the end-use sectors. Region-specific technology portfolios, i.e., different hedging options, can cause growing energy exchange between the regions in comparison with the deterministic case.     

Status of geothermal energy amongst the world's energy sources

The world primary energy consumption is about 400 EJ/year, mostly provided by fossil fuels (80%). The renewables collectively provide 14% of the primary energy, in the form of traditional biomass (10%), large (>10 MW) hydropower stations (2%), and the “new renewables” (2%). Nuclear energy provides 6%. The World Energy Council expects the world primary energy consumption to have grown by 50–275% in 2050, depending on different scenarios. The renewable energy sources are expected to provide 20–40% of the primary energy in 2050 and 30–80% in 2100. The technical potential of the renewables is estimated at 7600 EJ/year, and thus certainly sufficiently large to meet future world energy requirements. Of the total electricity production from renewables of 2826 TWh in 1998, 92% came from hydropower, 5.5% from biomass, 1.6% from geothermal and 0.6% from wind. Solar electricity contributed 0.05% and tidal 0.02%. The electricity cost is 2–10 US¢/kWh for geothermal and hydro, 5–13 US¢/kWh for wind, 5–15 US¢/kWh for biomass, 25–125 US¢/kWh for solar photovoltaic and 12–18 US¢/kWh for solar thermal electricity. Biomass constitutes 93% of the total direct heat production from renewables, geothermal 5%, and solar heating 2%. Heat production from renewables is commercially competitive with conventional energy sources. Direct heat from biomass costs 1–5 US¢/kWh, geothermal 0.5–5 US¢/kWh, and solar heating 3–20 US¢/kWh.