Energy security and renewable electricity trade—Will Desertec make Europe vulnerable to the “energy weapon”?

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.     

Natural gas corridors between the EU and its main suppliers: Simulation results with the dynamic GASTALE model

Growth in gas demand poses a challenge for European energy consumers and other gas-importing countries in terms of an increasing dependency on gas imports and consequently also supply security. This paper focuses on interactions among demand, supply, and investments in natural gas corridors, namely pipeline transport, LNG, and storage facilities, affecting the European natural gas market over the period 2005–2030. A number of policy scenarios, including a business-as-usual (BAU) scenario, are formulated to study the impact of demand uncertainty and delays in investment on the gas transport infrastructure required in the long run in Europe. The analyses indicate that substantial investments in gas transport corridors are needed to accommodate imports and seasonal demand variations. Analysis of scenarios of supply interruption, in the form of suddenly reduced import capacity for particular pipeline routes, indicates that portions of Europe could experience price increases of up to 100% in the case of a year-long interruption. To accommodate import needs and to mitigate possible disruptions, pipeline connections running from East to West need to be given special priority.     

Expanding electricity capacity in Thailand to meet the twin challenges of supply security and environmental protection

Rapid growth in electricity demand in Thailand is a major challenge for electric utilities trying to ensure adequate supply. Continued reliance on natural gas for power supply makes the supply mix non-diversified and exposes the country to supply risks while a diversification to other fossil fuels imposes additional environmental burdens. To find an acceptable solution to this twin challenge, this paper assesses four scenarios of electricity capacity expansion planning for Thailand for the period between 2011 and 2025 under two different assumptions of fuel prices to reflect the case of international high oil price affecting cost of fuels for power generation in Thailand. It is found that the lowest environmental emissions are obtained from the scenario where power generation is highly dominated by natural gas. In contrast, the least cost electricity generation is achieved from the case if nuclear power plant is added into the Thai power system. Reliance on natural gas for power generation increases the spending on gas purchase as a share of the gross domestic product (GDP)—between 2.38% and 3.61% of (GDP). In addition, fuel import dependence, particularly for natural gas and coal, increases exposing the country to possible price volatility.     

Transnational infrastructure vulnerability: The historical shaping of the 2006 European “Blackout”

The “European Blackout” of 4 November 2006 is a key reference in current debates on transnational electricity infrastructure vulnerability and governance. Several commentators have observed that to understand what happened, one must look at history. Our paper answers this call and demonstrates how historical choices, path dependencies, and ways of dealing with these afterwards, have shaped Europe's electric power infrastructure and its vulnerability geography. We show that the decentralized organization of transnational electricity infrastructure and governance, often blamed for present-day power grid fragility, was informed by reliability considerations that still count today. We also address the (meso)regional logic of the failure, foregrounding how stakeholders from different parts of Europe historically chose to collaborate in different ways, with due consequences for the 2006 disturbance and other recent blackouts. Finally, the paper observes that today's notion of transnational electricity infrastructure vulnerability, supposedly demonstrated by the 2006 blackout, is highly contested as many stakeholders find the system extremely reliable.     

Policy changes and the dynamics of capacity expansion in the Swiss electricity market

Capacity of supply is a crucial matter in electricity markets as it directly influences reliability of supply, price volatility and blackout risk. In this paper, we analyse the dynamics of capacity expansion in the Swiss electricity market and the impact of different policies such as nuclear phaseout and management of electricity exchanges – imports and exports – policies. This article develops the conceptualization model presented in [Ochoa, P., 2007b. Policy changes in the Swiss electricity market: a system dynamics analysis of likely market responses. Socio-Economic Planning Sciences 41 (4):336–349.]. We build a system dynamics model based on the dynamics of capacity expansion explained in the latter paper and present and analyse different scenarios. We conclude that international electricity exchanges are important for the Swiss market as they help to lower costs and to increase the income of the utility companies; however, we illustrate the need for explicit policies for managing imports and exports of electricity to avoid import dependence from neighbouring countries.     

Effect of demand management on regulated and deregulated electricity sectors

Our society derives a quantifiable benefit from electric power. In particular, forced outages or blackouts have enormous consequences on society, one of which is loss of economic surplus. The society relies on having a continuous supply of electrical energy. Some customers may willingly risk this continuous supply and participate in demand management programs for electrical power. If the power system grid is in trouble, electric utilities need to have demand relief. Customers willing to reduce their demand to help the system can receive an incentive fee for helping the utilities. Demand relief can be system wide or location specific. Sometimes it can be more effective to fix the electrical demand vs. supply imbalance from the demand side. The value of demand management contracts is greatly affected by customer location. Inclusion of locational attributes into the contract design procedure increases the effectiveness of the contracts by helping a utility get more value from its demand management programs. Independent System Operators and regulators, among others, can also benefit from effective demand management. This paper will investigate how this type of demand management contracts can help the electricity sector both in regulated and deregulated environments.     

A scenario analysis of investment options for the Cuban power sector using the MARKAL model

The Cuban power sector faces a need for extensive investment in new generating capacity, under a large number of uncertainties regarding future conditions, including: rate of demand growth, fluctuations in fuel prices, access to imported fuel, and access to investment capital for construction of new power plants and development of fuel import infrastructure. To identify cost effective investment strategies under these uncertainties, a supply and power sector MARKAL model was assembled, following an extensive review of available data on the Cuban power system and resource potentials. Two scenarios were assessed, a business-as-usual (BAU) scenario assuming continued moderate electricity load growth and domestic fuel production growth, and a high growth (HI) scenario assuming rapid electricity demand growth, rapid increase in domestic fuel production, and a transition to market pricing of electricity. Within these two scenarios sets, sensitivity analyses were conducted on a number of variables. The implications of least-cost investment strategies for new capacity builds, investment spending requirements, electricity prices, fuel expenditures, and carbon dioxide emissions for each scenario were assessed. Natural gas was found to be the cost effective fuel for new generation across both scenarios and most sensitivity cases, suggesting that access to natural gas, through increased domestic production and LNG import, is a clear priority for further analysis in the Cuban context.     

Centralised and distributed electricity systems

Because of their high level of integration, centralised energy supply systems are vulnerable to disturbances in the supply chain. In the case of electricity especially, this supply paradigm is losing some of its appeal. Apart from vulnerability, a number of further aggravating factors are reducing its attractiveness. They include the depletion of fossil fuels and their climate change impact, the insecurities affecting energy transportation infrastructure, and the desire of investors to minimise risks through the deployment of smaller-scale, modular generation and transmission systems.     

Indicators of security of natural gas supply in Asia

Natural gas has become an increasingly valuable resource and a global commodity. The demand for it has significantly increased. Japan, Korea and Taiwan heavily rely on liquefied natural gas (LNG) imports for their gas supplies from Malaysia, Brunei, Indonesia, Australia and the Middle East. On the other hand, countries like Thailand and Singapore import gas via trans-border pipelines. Gas supply interruptions, volatile gas prices, transportation and distribution bottlenecks, and a growing reliance on imports over longer distances have renewed interest on gas security in Asia. This paper examines the relative vulnerability to natural gas supply disruptions of seven gas-importing countries in Asia for year 2008. Based on four indicators of security of gas supply, a composite gas supply security index is estimated as an overall indication of gas vulnerability for our sample countries. The results demonstrate that there are differences in the values of the overall indicator of gas vulnerability among countries and the assessment is useful in developing an effective strategy of natural gas supply security in countries in the Asian region.     

All quiet on the eastern front? Disruption scenarios of Russian natural gas supply to Europe

The 2014 Russian–Ukrainian crisis reignited European concerns about natural gas supply security recalling the experiences of 2006 and 2009. However, the European supply situation, regulation and infrastructure have changed, with better diversified import sources, EU member states being better connected and a common regulation on the security of supply has been introduced. Nevertheless, European dependency on natural gas remained high. This paper investigates different Russian natural gas export disruptions scenarios and analyses short- and long-term reactions in Europe. We use the Global Gas Model (GGM), a large-scale mixed complementarity representation of the natural gas sector with a high level of technical granularity with respect to storage and transportation infrastructure. While we find that most of the EU member states are not severely affected by Russian disruptions, some East European countries are very vulnerable. Prioritizing the removal of infrastructure bottlenecks is critical for securing a sufficient natural gas supply to all EU member states.     

Hydrogen supply chain scenarios for the decarbonisation of a German multi-modal energy system

Analysing hydrogen supply chains is of utmost importance to adequately understand future energy systems with a high degree of sector coupling. Here, a multi-modal energy system model is set up as linear programme incorporating electricity, natural gas as well as hydrogen transportation options for Germany in 2050. Further, different hydrogen import routes and optimised inland electrolysis are included. In a sensitivity analysis, hydrogen demands are varied to cover uncertainties and to provide scenarios for future requirements of a hydrogen supply and transportation infrastructure. 80% of the overall hydrogen demand of 150 TWh/a emerge in Northern Germany due to optimised electrolyser locations and imports, which subsequently need to be transported southwards. Therefore, a central hydrogen pipeline connection from Schleswig-Holstein to the region of Darmstadt evolves already for moderate demands and appears to be a no-regret investment. Furthermore, a natural gas pipeline reassignment potential of 46% is identified.     

Fossil-fuel dependence and vulnerability of electricity generation: Case of selected European countries

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.     

Future European gas supply in the resource triangle of the Former Soviet Union,the Middle East and Northern Africa

A steady increase of natural gas demand can be observed in Europe over the last decades. Due to the European obligation to reduce greenhouse gas emissions in the framework of the Kyoto Protocol, the trend toward natural gas is expected to continue in the future. The increased consumption is faced by comparably low indigenous gas resources within Europe, so that the dependency of Europe on gas imports from abroad will rise in the future. In addition to the existing supply sources Russia and Algeria, gas resources from the Middle East and the Caspian and the Central Asian regions may be supply options to cover Europe's gas demand in the future. Against this background, possible natural gas supply options as well as the transport infrastructure to and within Europe are discussed regarding their technical capacity and their costs. With the help of a cost-minimization model of the European gas supply system, the gas flows and the infrastructure capacity development up to the year 2030 are analyzed. In a sensitivity analysis, the impacts of demand variations on the choice of supply sources are studied.     

Elecxit: The cost of bilaterally uncoupling British-EU electricity trade

The UK's withdrawal from the European Union could mean that it leaves the EU's Internal Energy Market for electricity (Elecxit). This paper develops methods to study the longer-term consequences of this electricity market disintegration, especially the end of market coupling. Before European electricity markets were coupled, different market closing times forced traders to commit to cross-border trading volumes based on anticipated market prices. Interconnector capacity was often under-used, and power sometimes flowed from high- to low-price areas. A model of these market frictions is developed, empirically verified on 2009 data (before French and British market coupling) and applied to estimate the costs of market uncoupling in 2030. A less efficient market and the abandonment of some planned interconnectors would raise generation costs by €700 m a year (2%) compared to remaining in the Internal Energy Market. This result is sensitive to how the British and French electricity systems develop over the coming decades. Economic losses are four times greater (€2700 m a year) if France retains substantial nuclear capacity due to its low marginal costs. Conversely, losses are reduced by two-thirds if UK weakens its decarbonisation ambitions, as lower carbon prices subsidise British fossil fuel generation, allowing electricity prices to converge with those in France. A Hard Elecxit would make British prices rise and French prices fall in three of our four scenarios, with the opposite movements in the fourth scenario.     

Assessment of demand for natural gas from the electricity sector in India

Electricity sector is among the key users of natural gas. The sustained electricity deficit and environment policies have added to an already rising demand for gas. This paper tries to understand gas demand in future from electricity sector. This paper models the future demand for gas in India from the electricity sector under alternative scenarios for the period 2005–2025, using bottom-up ANSWER MARKAL model. The scenarios are differentiated by alternate economic growth projections and policies related to coal reforms, infrastructure choices and local environment. The results across scenarios show that gas competes with coal as a base-load option if price difference is below US $ 4 per MBtu. At higher price difference gas penetrates only the peak power market. Gas demand is lower in the high economic growth scenario, since electricity sector is more flexible in substitution of primary energy. Gas demand reduces also in cases when coal supply curve shifts rightwards such as under coal reforms and coal-by-wire scenarios. Local environmental (SO₂ emissions) control promotes end of pipe solutions flue gas de-sulfurisation (FGD) initially, though in the longer term mitigation happens by fuel substitution (coal by gas) and introduction of clean coal technologies integrated gasification combined cycle (IGCC).     

Cost effects of international trade in meeting EU renewable electricity targets

The European market for renewable electricity received a major stimulus from the adoption of the Directive on the Promotion of Renewable Electricity. The Directive specifies the indicative targets for electricity supply from renewable energy sources (RES-E) to be reached in European Union (EU) Member States in the year 2010. It also requires Member States to certify the origin of their renewable electricity production. This article presents a first EU-wide quantitative evaluation of the effects of meeting the targets, using an EU-wide system for tradable green certificates (TGC). We calculate the equilibrium price of green certificates and identify which countries are likely to export or import certificates. Cost advantages of participating in such an EU-wide trading scheme are determined for each of the Member States. Moreover, we identify which choice of technologies results in meeting targets at least costs. Results are obtained from a model that quantifies the effects of achieving the RES-E targets in the EU with and without trade. The article provides a brief insight in this model as well as the methodology that was used to specify cost potential curves for renewable electricity in each of the 15 EU Member States. Model calculations show that within the EU-wide TGC system, the total production costs of the last option needed to satisfy the overall EU RES-E target equals 9.2 eurocent/kWh. Assuming that the production price of electricity on the European power market would equal 3 eurocent/kWh in the year 2010, the indicative green certificate price equals 6.2 eurocent/kWh. We conclude that implementation of an EU-wide TGC system is a cost-efficient way of stimulating renewable electricity supply.     

Identification of congestion and valuation of transport infrastructures in the European natural gas market

Rising import dependency, increasing market liberalization and cross-border trade and security of supply fears facilitate investments in natural gas supply infrastructures in Europe. In order to ensure an efficient allocation of capital resources, it is important to identify congestion in the existing system and investment requirements based on economic principles. This paper first outlines an analytical framework for the identification of bottlenecks and the evaluation of transport capacities and the cost of congestion based on nodal prices. Secondly, an infrastructure model of the European gas market with high temporal and spatial granularity which exhibits the characteristics of the theoretical model is introduced. Parameterizing the model with the existing infrastructure and applying a demand and supply scenario for the year 2015, congestion mark-ups between countries in Europe are estimated. This approach indicates potential bottlenecks which might arise within the next five years and quantifies their economic costs. With only some temporary congestion, physical market integration is found to be high in Western Europe. In Eastern Europe, severe bottlenecks are identified and discussed. Implications for efficient investment decisions arising from the findings are examined in the context of the theoretical considerations.     

Using strong sustainability to optimize electricity generation fuel mixes

This work represents a contribution to the field of sustainable electricity system design by using an optimization tool to specify the final mix composition, subject to the constraints of: emissions that are within the biocapacity of the region; a diverse and robust electricity supply system; and supply that at least meets current demand. The 25-country European Union (EU-25) is used as a case study. All the goals, save diversity, can be met by re-structuring the current fuel mix, thus maintaining current consumption levels. The diversity target is only met when consumption is reduced by 10–15% and the constraint on maximum material throughput is relaxed. Re-structuring the mix and reducing consumption is insufficient to achieve a sustainable EU carbon footprint. However, the solution proposed singlehandedly allows the EU to meet its Kyoto emissions target as well as its 2007 policy of a reduction of 20% in greenhouse gas emissions by 2020.     

Impact of power outages on households in developing countries: Evidence from Ethiopia

In developing countries, access to electricity has received much attention. However, the reliability of its supply has been given less focus, though power outages happen frequently and are expected to limit gains from electricity connection. In this paper, I go beyond electricity connection and provide an average estimate of monthly defensive expenditures at different monthly hours of power outages for urban households in Ethiopia, using the generalized propensity score method. I also elicit households' willingness to pay for improved electricity supply, using a stated preference method, to account for non-monetary costs of outages. Based on the average estimated results, a back-of-the-envelope calculation for urban households of Ethiopia with electricity connection provides a monthly defensive expenditure of US$14.8 million and a monthly willingness to pay of US$6.2 million for improved electricity supply, on top of the regular electricity bill. The study underscores that connection to electricity is not enough; the reliability of its supply is also important.     

Visible technologies,invisible organisations: An empirical study of public beliefs about electricity supply networks

Reducing carbon emissions in the energy system poses significant challenges to electricity transmission and distribution networks. Whilst these challenges are as much social as economic or technical, to date few research studies have investigated public beliefs about electricity supply networks. This research aimed to address this gap by means of a nationally representative study of UK adults (n=1041), probing beliefs about how electricity reaches the home, responsibility for electricity supply, associations with the words ‘National Grid’, as well as beliefs about the planning of new infrastructure. Findings suggest that electricity networks are represented predominantly in terms of technologies rather than organisations, specifically in terms of familiar, visible components such as cables or wires, rather than more systemic concepts such as networks. Transmission and distribution network operators were largely invisible to members of the public. In terms of planning new lines, most respondents assumed that government ministers were involved in decision-making, while local residents were widely perceived to have little influence; moreover, there was strong public support for placing new power lines underground, regardless of the cost. In conclusion, organisational invisibility, coupled with low expectations of participatory involvement, could provoke public opposition and delay siting new network infrastructure.