Potential cost savings from internal/external CO2 emissions trading in the Korean electric power industry

Korea plans to introduce an emissions trading scheme for the controlling greenhouse gas emissions in 2015. Using Shephard's (1970) output distance function, we first estimate the shadow price of CO₂ for power generators in the Korean fossil-fueled electric generation industry. Then, by assuming that each power generator is required to reduce CO₂ emissions by one ton, we compute the potential cost savings from internal trading among generators within the same plant and from external trading across plants at prevailing market prices. The results indicate that, on average, the generators paid $14.63 to abate one ton of CO₂ emissions in 2007. Plants realized additional gains through external trading. In particular, cost savings from trades between different fuel-fired plants were substantial.     

Exploring the price dynamics of CO2 emissions allowances in China's emissions trading scheme pilots

Establishing regional emissions trading scheme pilots in China is a newly transformative and explorative practice. In this paper, we examine the spot price dynamics, asymmetric clustering and regime-switching behaviors of CO₂ emissions allowances in the new China-wide emissions trading scheme (CETS) pilots using AR-GARCH, AR-TARCH and MRS-AR-GARCH models. The regional ETS pilots' design in China vary widely in their coverage thresholds, sector coverage, emissions allocation and caps setting methods, market trading rules and price stabilization provisions. Our empirical results indicate that the spot prices of regional emissions allowances exhibit significant dynamic behaviors, asymmetric leverage effects and regime-switching behaviors in the entire period considered; previous market overreactions in the Beijing, Tianjin and Guangdong pilots have stronger price clustering effects on future conditional variances than do the Shanghai and Hubei pilots. Unexpected market shocks and greater persistence in the Beijing, Tianjin and Guangdong ETS pilots display stronger market volatility and higher market risks, and their asymmetric leverage effects display a decreasing trend in the volatility of the BEA, TJEA and GDEA prices. The BEA and SHEA prices exhibit significant regime-switching behaviors, price jumps and higher volatility; in addition, the changes in the regime-switching phases are often related to the political mechanism design and the fundamental market factors. Those empirical results are beneficial for government decision-makers and market participants to strengthen risk management strategies, support emission-related investment decisions and optimize co-benefits of alternative energy-environmental policies.     

Challenges for engineers in the electric power industry

In pace with the worldwide trend, the Japanese electric power industries are being deregulated and entering into competitive markets. Generation and a large size retail market are open to competition. The transmission system is open for use by new power suppliers, while utilities get the freedom of new business expansion. Traditional electric power utilities and new players are actively preparing for the new environment. This article discusses the challenges and opportunities for engineers in the electric power industry created by the changes occurring in the industry today.     

Reshaping the electric power industry

The electric power industry has entered a period of rapid change — with profound implications for the health of the global economy and natural environment. Many of today's vertically integrated utilities are likely to be restructured or broken up in the coming decade, yielding a commodity market in power generation and transmission, and a competitive services market at the local distribution level. The transformation of the industry is being driven both by broad trends toward privatization and deregulation, and by rapid advances in energy producing and consuming technologies. Devices such as fuel cells, photovoltaics, and flywheels will open the way to a more decentralized power industry in which electricity generation and storage facilities are increasingly located in customers' own facilities — integrated and controlled by new digital communications systems.     

Simulation analysis of emissions trading impact on a non-utility power plant

Non-utility power plants can competitively participate in open electricity market to reduce operational costs but in the absence of pollution charges or emissions trading such generators are tempted to cause greater pollution for profit maximization. This paper presents a solution that incorporates pollution charges for nitrogen oxides and sulphur dioxide emissions in line with existing national environmental quality standards and a new carbon dioxide emissions trading mechanism. A novel approach has been used for allocation of allowable emissions that favors efficiently fuelled and environmentally friendly operation for maximizing profit. Impact of proposed carbon trading on economical utilization of enormous indigenous coal reserves has been analyzed and determined to be acceptable. Software developed in this paper, harnessing Sequential Quadratic Programming capabilities of Matlab, is shown to be adequate simulation tool for various emissions trading schemes and an useful operational decision making tool for constrained non-linear optimization problem of a non-utility power plant.     

基于低碳激励型出清的跨省区发电权交易双层优化模型

为打破省间交易壁垒,在经济发展的同时,促进清洁能源在全国范围内的优化配置,建立了基于低碳激励型出清的清洁能源跨省区交易双层优化模型。针对传统出清方式未充分考虑常规能源发电的环境负外部性,文章提出了一种低碳激励型出清方式,并以最大化交易的经济和环境效益为目标构建了交易中心出清模型。模型上层引入碳交易机制,将碳排放外部成本内部化;基于利润最大化建立了各发电商交易竞价决策模型;通过算例仿真,从多个角度验证了所提模型的有效性。研究结果表明,该模型不仅能够调动常规能源发电商的积极性,促进清洁能源发电的大范围消纳,还能够满足各发电主体的利益诉求,实现多方共赢。     

Emissions trading and investment decisions in the power sector—a case study in Finland

Organizations, which consider investment in or divestment of power production licences/capacity within the European Community, are exposed to the impacts of the European Union Emission allowance Trading Scheme (EU ETS). In this paper, the consequences of the EU ETS on investment decisions are explored in a country-specific setting in Finland. First, we review the general mechanisms through which the EU ETS influences size, timing and cashflows of an investment. Next, we discuss the projected changes in Finnish power producers’ investment environment and examine the financial impacts due to the EU ETS on a case investment decision, a hypothetical condensing power plant (250 MW_e). The standard discounted cash flow (DCF) analysis is extended to take into account the value of two real options: the option to wait and the option to alter operating scale. In a quantitative investment appraisal, the impact of emissions trading not only depends on the expected level of allowance prices, but also on their volatility and correlation with electricity and fuel prices. The case study shows that the uncertainty regarding the allocation of emission allowances is critical in a quantitative investment appraisal of fossil fuel-fired power plants.     

Energy in the Federal German Republic: The electric power industry: investment requirements and their financing

After an era of relatively stable electricity prices, the electric power industry in the Federal Republic of Germany has been forced to raise its prices at increasingly shorter intervals since the beginning of the seventies. The reasons given for this are continuing cost increases; the need to remain profitable; and the need to finance essential investment. Drs Schmitt and Mönig assess the course of investment in this branch of industry up to the mid-eighties in the light of the growing importance of capital costs to the electric power sector, and discuss the problems of meeting the resultant need for finance.     

光伏发电在我国电力能源结构中的战略地位和未来发展方向

前 言 在可再生能源的家族中，资源量最大、分布最普遍的是太阳能，事实上，其它可再生能源也间接来自于太阳能。全球权威能源机构预测，到本世纪中期太阳能将成为人类能源构成中的重要组成部分，而到本世纪末太阳能将成为人类能源构成中的主要部分。我国陆地表面每年接受太阳辐射能相当于约49000亿tce（标准煤），全国三分之二的国土面积年日照在2200小时以上，年太阳辐射量超过5000焦／米^2（相当于170千克标准煤／米^2），太阳能资源丰富，是中华民族赖以生存，永续繁衍的最宝贵的资源。     

A power quality monitoring system: a case study in DSP-basedsolutions for electric power industry

The purpose of this study is to develop and implement a power quality monitoring system that will enable power quality engineers to conduct diagnostic testing in the field. The study is limited to the implementation of hardware and software required to process the analog signals received. A real-time monitoring system that can be used to perform automated power quality testing is described. The system is centered on a digital signal processor (DSP) interfaced to a personal computer (PC). The test signal is input to the system through the A/D board. The signal is analyzed in real-time in the DSP, and the results are transferred to the PC through the communication interface. The PC presents the results and interacts with the user. This system can be used to perform onsite power quality studies     

Baselines for carbon emissions in the Indian and Chinese power sectors: Implications for international carbon trading

The study examines the dynamics of carbon emissions baselines of electricity generation in Indian states and Chinese provinces in the backdrop of ongoing electricity sector reforms in these countries. Two Indian states—Gujarat and Andhra Pradesh, and three Chinese provinces–Guangdong, Liaoning and Hubei have been chosen for detailed analysis to bring out regional variations that are not captured in aggregate country studies. The study finds that fuel mix is the main driver behind the trends exhibited by the carbon baselines in these five cases. The cases confirm that opportunities exist in the Indian and Chinese electricity sectors to lower carbon intensity mainly in the substitution of other fuels for coal and, to a lesser extent, adoption of more efficient and advanced coal-fired generation technology. Overall, the findings suggest that the electricity sectors in India and China are becoming friendlier to the global environment. Disaggregated analysis, detailed and careful industry analysis is essential to establishing a power sector carbon emissions baseline as a reference for CDM crediting. However, considering all the difficulties associated with the baseline issue, our case studies demonstrate that there is merit in examining alternate approaches that rely on more aggregated baselines.     

CO2 emissions and carbon capture and storage prospects in the electric power industry of Guangdong Province,China

The main objective of this study is to characterise the electric power industry's CO₂ emissions and to understand its carbon capture and storage (CCS) prospects in China's Guangdong Province. Coal-fired power plants in Guangdong are the major point sources, contributing to more than 90% of CO₂ emissions of the electric power industry. The fossil-fuelled power plants are mainly located in the Pearl River Delta (PRD), and the newly built and planned large plants are mainly located in coastal zones. More basic research and investigation are necessary in the coming years to develop CCS. In the medium term, the harbours of eastern cities can be the key areas for CCS demonstration projects. In the long term, the reduction effect can be more remarkable if the CO₂ capture and pipeline project could be constructed on a large scale within the densest CO₂ point source area in the PRD.     

Impacts of deregulation on the electric power industry

The author argues that the deregulation of the electric utility industry, coupled with the emergence of a knowledge-based information economy, is a double engine that makes this the most energized time ever to be in the electric business     

Mitigating the anthropogenic global warming in the electric power industry

One of the most current and widely discussed factors that could lead to the ultimate end of man's existence and the world at large is global warming. Global warming, described as the greatest environmental challenge in the 21st century, is the increase in the average global air temperature near the surface of the Earth, caused by the gases that trap heat in the atmosphere called greenhouse gases (GHGs). These gases are emitted to the atmosphere mostly as a result of human activities, and can lead to global climate change. The economic losses arising from climate change presently valued at $125 billion annually, has been projected to increase to $600 billion per year by 2030, unless critical measures are taken to reduce the spate of GHG emissions. Globally, the power generation sector is responsible for the largest share of GHG emissions today. The reason for this is that most power plants worldwide still feed on fossil fuels, mostly coal and consequently produce the largest amount of CO₂ emitted into the atmosphere. Mitigating CO₂ emissions in the power industry therefore, would significantly contribute to the global efforts to control GHGs. This paper gives a brief overview of GHGs, discusses the factors that aid global warming, and examines the expected devastating effects of this fundamental global threat on the entire planet. The study further identifies the key areas to mitigate global warming with a particular focus on the electric power industry.     

Energy-saving generation dispatch toward a sustainable electric power industry in China

Energy shortages, climate change and environmental pollution are critical issues that the entire world is faced with currently. To tackle the challenge and realize sustainable development, the Chinese government launched the Energy-Saving Generation Dispatch (ESGD) in 2007. In the ESGD scheme, generating units are dispatched based on fuel consumption rates and pollutant emission intensities from low to high. However, annual generation quotas still widely exist. With the mandatory shutdown of small-capacity and low-efficiency thermal generating units in 2006–2010, most of the currently running thermal generating units are large-capacity and highly efficient units. The additional improvement of the overall energy efficiency under this situation is a key problem for the Chinese electric power industry. To this end, a new type of ESGD framework is designed in this paper. Sequential coordination among yearly, monthly, day-ahead and real-time generation schedules is proposed. Based on the framework, the corresponding models are formulated. Empirical analysis is conducted using the realistic data obtained from the Guangdong Power Grid Corporation. Four generation dispatch modes are compared. The results indicate that the proposed ESGD mode can further reduce energy consumption and pollutant emissions. Hopefully, this paper can provide a valuable reference for policy making in the Chinese power sector.     

The efficiency of electric motive power in industry

The paper indicates the methods used and the results obtained during a study of the energy losses incurred by industrial electric drives. Simple models are derived which permit the losses in a wide range of equipment to be assessed from measurements which do not involve interference with production. The study suggests that upwards of 50% of the electricity supplied to industrial rotating machinery is wastefully used in producing the final mechanical drive, and that this represents a significant fraction of national electricity production.     

Joint price and volumetric risk in wind power trading: A copula approach

This paper examines the dependence between wind power production and electricity prices and discusses its implications for the pricing and the risk distributions associated with contracts that are exposed to joint price and volumetric risk. We propose a copula model for the joint behavior of prices and wind power production, which is estimated to data from the Danish power market. We find that the marginal behavior of the individual variables is best described by ARMA–GARCH models with non-Gaussian error distributions, and the preferred copula model is a time-varying Gaussian copula. As an application of our joint model, we consider the case of an energy trading company entering into longer-term agreements with wind power producers, where the fluctuating future wind power production is bought at a predetermined fixed price. We find that assuming independence between prices and wind power production leads to an underestimation of risk, as the profit distribution becomes left-skewed when the negative dependence that we find in the data is accounted for. By performing a simple static hedge in the forward market, we show that the risk can be significantly reduced. Furthermore, an out-of-sample study shows that the choice of copula influences the price of correlation risk, and that time-varying copulas are superior to the constant ones when comparing actual profits generated with different models.     

Energy conservation and emission reduction policies for the electric power industry in China

Because of China's increasingly limited energy supplies and serious environmental pollution, much attention has been paid to conserving energy and reducing emissions to help the country's economy achieve sustainable development. As the electric power industry is the largest consumer of coal resources in China and also emits high levels of air pollutants each year, the Chinese government has enacted many technical and economic policies for energy conservation and emission reduction in the last few years. These policies are summarized in this paper, along with relevant laws and medium- and long-term plans, all of which address ideas such as adjusting the power generation mix, promoting demand-side management, introducing energy-efficient scheduling, and installing desulfurization units. The paper also assesses the results of these policies by analyzing several key indicators of energy consumption and emissions. The analysis shows that although some progress has been made in conserving energy and reducing emissions, substantial work is still required for China to catch up with developed countries. Some suggestions for future work are provided.     

Pareto optimization of a combined cycle power system as a decision support tool for trading off investment vs. operating costs

The monetary optimization of thermodynamic processes may be approached by inherently thermodynamic frameworks like exergo-economic analysis, or a rigid direct cost evaluation is applied. This paper, treating the optimization of a combined cycle power plant, follows the second path. Operation and investment costs are usually treated as a combined value by means of an annualization factor. Due to the rather far-stretching time horizon of turbine energy conversion systems, differing behaviour of those contributions with time, and varying subjective weighting and assumptions of future developments, this conventional subsumption is not necessarily a sensible one to identify the best solution for a given decision situation. It is therefore favorable to address both costing goals independently and identify the pareto set of the problem prior to a final decision on which parametrization of the system should be chosen. A numerical pareto optimization technique based on an evolutionary base strategy is discussed that addresses this type of problem in an efficient and easy to adapt manner.     

也谈入世后对电力行业的机遇与挑战

加入WTO电力工业将面临严峻的挑战 ,电力市场的垄断将被打破 ,竞争的结果 ,对企业管理、电能质量和电价都将有深刻的影响 ,只要我们适时抓住机遇 ,重视人才培养 ,提高科技水平 ,加快改革开放 ,促进电力工业发展 ,就能把我国电力行业整体水平提高到能与跨国公司相匹敌 ,甚至也可以走向国际市场。