Output and substitution elasticities of energy and implications for renewable energy expansion in the ECOWAS region

This study estimates output and substitution elasticities of renewable energy and nonrenewable energy for the Economic Community of West African States (ECOWAS) and discusses implications for expanding the former. The results show that nonrenewable energy promises greater benefits for ECOWAS economic transition, with output elasticities averaging between 0.052–0.579 and −0.055 to 0.223 for nonrenewable energy and renewable energy respectively. Overall estimated technological progress is low (−0.5% to 2.6%); the bulk coming from input efficiency. Substitution elasticities (0.02–0.94) suggest potential for switching towards renewable energy. Notwithstanding, scale, economics and sitting problems inherent in renewable power generation challenge the opportunities for energy substitution. A sustainable policy solution, therefore, appears to be one favoring scaled and efficient electricity generation from fossil energy in the short-run with a gradual switch towards renewable power in the long-run. In general, the applied model provides insights that energy efficiency enhances sustainable growth by propelling technological advancement especially when technical change is scale-biased and factor-augmenting. The study also provides insights that impacts of exogenous shocks to inputs are temporary, and hence, do not jeopardize efforts aimed at scaling output through increased and efficient use of labor, capital and energy; especially nonrenewable energy.     

Energy from sugarcane bagasse under electricity rationing in Brazil: a computable general equilibrium model

In the midst of the institutional reforms of the Brazilian electric sectors initiated in the 1990s, a serious electricity shortage crisis developed in 2001. As an alternative to blackout, the government instituted an emergency plan aimed at reducing electricity consumption. From June 2001 to February 2002, Brazilians were compelled to curtail electricity use by 20%. Since the late 1990s, but especially after the electricity crisis, energy policy in Brazil has been directed towards increasing thermoelectricity supply and promoting further gains in energy conservation. Two main issues are addressed here. Firstly, we estimate the economic impacts of constraining the supply of electric energy in Brazil. Secondly, we investigate the possible penetration of electricity generated from sugarcane bagasse. A computable general equilibrium (CGE) model is used. The traditional sector of electricity and the remainder of the economy are characterized by a stylized top-down representation as nested CES (constant elasticity of substitution) production functions. The electricity production from sugarcane bagasse is described through a bottom-up activity analysis, with a detailed representation of the required inputs based on engineering studies. The model constructed is used to study the effects of the electricity shortage in the preexisting sector through prices, production and income changes. It is shown that installing capacity to generate electricity surpluses by the sugarcane agroindustrial system could ease the economic impacts of an electric energy shortage crisis on the gross domestic product (GDP).     

The impacts on climate mitigation costs of considering curtailment and storage of variable renewable energy in a general equilibrium model

The curtailment and storage associated with the fluctuation of electricity supplied by variable renewable energy (VRE) may limit its penetration into electricity systems. Therefore, these factors need to be explicitly treated in the integrated assessment models (IAMs). This study improves the representation of curtailment and storage of VRE in a computable general equilibrium (CGE) model. With the data generated from an hourly power sector model, curtailment and storage of VRE electricity are treated as a function of the shares of solar and wind in the electricity mix. This relationship is incorporated into a CGE model and we also updated the VRE costs and resource potential. The results show that with such improvement, by 2100, in a 450 ppm atmospheric CO₂ equivalent concentration (henceforth ppm) scenario, some electricity generated from VRE is either curtailed (2.1%) or needs to be stored (2.9%). In contrast, if VRE fluctuation is not considered, the long-term global economic cost of carbon mitigation is significantly underestimated (by 52%) in the same scenario. Conversely, updating the VRE costs and resource potential leads to a decrease in mitigation costs. Our simulation implies that the fluctuation of VRE cannot be ignored and needs to be incorporated into CGE models. Moreover, in addition to storage with batteries, many other options are available to reduce curtailment of VRE. The top-down type CGE model has limitations to fully incorporate all aspects due to its limited spatial, temporal, and technological resolution.     

Optimal operation of a wind-electrolytic hydrogen storage system in the electricity/hydrogen markets

Wind power, the most promising renewable energy source in the world, plays an important role in the electricity markets. Wind power curtailment cannot be avoided in some countries due to its output has a special feature of randomness and volatility. Since the excess wind power being converted into hydrogen and sold to the hydrogen market will be the future trend. This study proposes a wind-electrolytic hydrogen storage system to participate in the electricity/hydrogen markets for selling electricity and hydrogen, which can help to improve the benefits of wind power in the electricity markets and addree the wind power curtailment effectively. With considering the uncertainties of wind power outputs and electricity prices, the optimal operation strategy is proposed with the objective of maximizing profits. The scenario-based stochastic method is adopted to describe the uncertainties, and the financial risk is evaluated using conditional value-at-risk. The operational problem of the proposed system is formulated into a mixed-integer linear programming model. Finally, the feasibility of the proposed operational strategy is validated by a case study. The results show that the expected revenue increases with the increase of the hydrogen selling price, indicating that investors can obtain profits by converting electricity into hydrogen. The optimal expected revenue increases by 33.42% when hydrogen price increases from 1.2 DKK/kWh to 1.8 DKK/kWh and the risk factor is equal to 0. Based on the analysis of the results, the importance of hydrogen can be proven.     

INDOOR SIMULATION OF A BASIN-TYPE SOLAR STILL

In this paper we develop an applied general equilibrium framework for assessing socio-economic impacts of alternative renewable energy policies and apply it to the bioenergy sector. The policy scenarios are assessed in a comparative static analysis. The numerical simulation results allow us to assess and compare welfare and distributional impacts of alternative renewable energy policies. Our empirical findings suggest that the bioenergy sector in Poland would benefit most from an indirect tax reduction. According to our simulation results, reducing the fossil energy sectors’ subsidies would be the second best policy option.     

A reduced-form approach for representing the impacts of wind and solar PV deployment on the structure and operation of the electricity system

In many climate change mitigation scenarios, integrated assessment models of the energy and climate systems rely heavily on renewable energy technologies with variable and uncertain generation, such as wind and solar PV, to achieve substantial decarbonization of the electricity sector. However, these models often include very little temporal resolution and thus have difficulty in representing the integration costs that arise from mismatches between electricity supply and demand. The global integrated assessment model, MESSAGE, has been updated to explicitly model the trade-offs between variable renewable energy (VRE) deployment and its impacts on the electricity system, including the implications for electricity curtailment, backup capacity, and system flexibility. These impacts have been parameterized using a reduced-form approach, which allows VRE integration impacts to be quantified on a regional basis. In addition, thermoelectric technologies were updated to include two modes of operation, baseload and flexible, to better account for the cost, efficiency, and availability penalties associated with flexible operation. In this paper, the modeling approach used in MESSAGE is explained and the implications for VRE deployment in mitigation scenarios are assessed. Three important stylized facts associated with integrating high VRE shares are successfully reproduced by our modeling approach: (1) the significant reduction in the utilization of non-VRE power plants; (2) the diminishing role for traditional baseload generators, such as nuclear and coal, and the transition to more flexible technologies; and (3) the importance of electricity storage and hydrogen electrolysis in facilitating the deployment of VRE.     

Renewable energy and policy options in an integrated ASEAN electricity market: Quantitative assessments and policy implications

Energy market integration (EMI) in the ASEAN region is a promising solution to relieve the current immobilization of its renewable energy resources and would serve the fast increasing demand for electricity in the region. EMI could be further extended with coordinated policies in carbon pricing, renewable energy portfolio standards (RPS), and feed-in-tariffs (FIT) in the ASEAN countries. Using a linear dynamic programming model, this study quantitatively assesses the impacts of EMI and the above-mentioned policies on the development of renewable energy in the power generation sector of the region, and the carbon emissions reduction achievable with these policies. According to our results, EMI is expected to significantly promote the adoption of renewable energy. Along with EMI, FIT appears to be more cost-effective than RPS and is recommended for the ASEAN region, albeit political barriers for policy coordination among the countries might be a practical concern. In addition, an RPS of 30% electricity from renewable sources by 2030, which is considered politically a “low-hanging fruit”, would achieve moderate improvements in carbon emissions reductions and renewable energy development, while incurring negligible increases in the total cost of electricity.     

Integration of large-scale hydrogen storages in a low-carbon electricity generation system

This study investigates the overall feasibility of large energy storages with hydrogen as energy carrier onsite with a pre-combustion carbon capture and storage coal gasification plant and assesses the general impacts of such a backup installation on an electricity generation system with high wind power portion. The developed system plant configuration consists of four main units namely the gasification unit, main power unit, backup power unit including hydrogen storage and ancillary power unit. Findings show that integrating a backup storage in solid or gaseous hydrogen storage configuration allows to store excessive energy under high renewable power output or low demand and to make use of the stored energy to compensate low renewable output or high power demand. The study concludes that the developed system configuration reaches much higher load factors and efficiency levels than a plant configuration without backup storage, which simply increases its power unit capacity to meet the electricity demand. Also from an economical point of view, the suggested system configurations are capable to achieve lower electricity generation costs.     

Wind power and photovoltaic power: How to improve the accommodation capability of renewable electricity generation in China?

China's wind curtailment and photovoltaic curtailment was one of the prominent issues in 2014, and the renewable curtailment worsened in 2015. With the rapid growth of renewables, the phenomenon of the insufficiency in renewable accommodation capability is becoming more and more serious in 2016. In that case, the problem of the insufficient accommodation capability is pointed out by analyzing China's development requirements. The renewable power generation scale, the renewable power consumption, and the restrictions on the renewable electricity generation are discussed from the China's market perspective. Meanwhile, the legal environment, the planning requirement, the institutional setting, and the policy tools are introduced from the perspective of governmental regulation. An empirical analysis, a cause analysis and a trend analysis are illustrated before explaining the problem of renewable curtailment and proposing a solution for enhancing the accommodation capability. According to the analysis results, the solution for addressing the wind curtailment and PV curtailment is offered with respect to the technology, the institution, the legislation, and the political aspect. Through the research, the research conclusions are drew finally and the corresponding policy recommendations are put forward.     

Electricity demand price elasticity in China based on computable general equilibrium model analysis

Based on the CGE model, this paper simulates the impact of electricity price adjustment on demand for electricity, and the simulation results show the range of electricity elasticities of different consumers. The elasticities of the high power-consuming sectors are relatively larger. However, the absolute values of the price elasticities are less than one. Furthermore, this paper quantitatively analyses the price elasticity of different categories of users, which are classified according to the objectives of China’s electricity price reform. The elasticity absolute value of Industry & Commerce is around 0.018, that of Residents is around 0.300 and that of Agriculture is around 0.066. Finally, the price elasticities of different consumers in 2005 and 2007 are calculated through the CGE model, and it is discovered that the price elasticity absolute values in 2007 are less than that in 2005. The analytical results of this paper can provide corresponding support for the formulation of electricity pricing mechanisms for the developing countries.     

State-scale evaluation of renewable electricity policy: The role of renewable electricity credits and carbon taxes

We have developed a state-scale version of the MARKAL energy optimization model, commonly used to model energy policy at the US national scale and internationally. We apply the model to address state-scale impacts of a renewable electricity standard (RES) and a carbon tax in one southeastern state, Georgia. Biomass is the lowest cost option for large-scale renewable generation in Georgia; we find that electricity can be generated from biomass co-firing at existing coal plants for a marginal cost above baseline of 0.2–2.2 cents/kWh and from dedicated biomass facilities for 3.0–5.5 cents/kWh above baseline. We evaluate the cost and amount of renewable electricity that would be produced in-state and the amount of out-of-state renewable electricity credits (RECs) that would be purchased as a function of the REC price. We find that in Georgia, a constant carbon tax to 2030 primarily promotes a shift from coal to natural gas and does not result in substantial renewable electricity generation. We also find that the option to offset a RES with renewable electricity credits would push renewable investment out-of-state. The tradeoff for keeping renewable investment in-state by not offering RECs is an approximately 1% additional increase in the levelized cost of electricity.     

A review on the pattern of electricity generation and emission in Indonesia from 1987 to 2009

The level of energy demand plays a fundamental role in today's society. It is a vital input in supporting the physical and social development of a country, as well as national economic growth. Looking at the energy demand scenario in present time, the global energy consumption is likely to grow faster than the population growth across the world. Like any other energy sectors, electricity demand has significantly increased in Indonesia over the past years. Currently, there are six types of power plants in the country. The main sources of electrical energy are generated using the gas turbines, steam turbines, combined cycles, geothermal, diesel engine and hydro-powers. Most of Indonesia's power plants are using fossil fuel for electricity generation. Substantial growth in domestic energy demand, however, would be a major challenge for Indonesia's energy supply sector in the future. Over the past decade, thermal power plants generated about 86.69% of electricity and about 13.31% was generated by renewable energy such as hydro-power and geothermal in 2009. The purpose of this study is to chronicle and show a clear view of 23 years trend of Indonesia's electricity generation industry. Furthermore, the capacity of power generation installed and electricity generation from 1987 to 2009 has been gathered for this study. The total pollutant emissions and emission per unit electricity generation for each type of power plants have been also calculated using emission factors. Also, the pattern of electricity generation and emission has been presented. The results show that the implementation and contribution of combined cycle power plants should be increased together with renewable energy and natural gas which are recommended to reduce greenhouse gas emission.     

An analysis of the proposed Btu tax on the us economy

This paper examines the impacts of a Btu tax on energy on the United States economy. The analytical approach used in the analysis consisted of a general equilibrium model composed of fourteen producing sectors, fourteen consuming sectors, six household categories classified by income and a government. The effects of imposing a tax on natural gas, coal, and nuclear power of 25.7 cents per million Btu and a tax on refined petroleum products of 59.9 cents per million Btu on prices and quantities are examined. The results are revealing. For example, a Btu tax on energy imposed at the point of production will result in lower output by the producing sectors (by about $122.4 billion), a decrease in the consumption of goods and services (by about $64.6 billion), and a reduction in welfare (by about $66.6 billion). The government would realize an increase in revenue of about $50.5 billion. In the case of the Btu tax being imposed at the point of consumption, there will be lower output by the producing sectors (by about $83.7 billion), a reduction in the consumption of goods and services (by about $48.3 billion), and a reduction in welfare (by about $49.5 billion). The government would realize an increase in revenue of $41.3 billion. Finally, when subjected to a sensitivity analysis, the results are reasonably robust with regard to the assumption of the values of the substitution elasticities.     

The potential of green ammonia production to reduce renewable power curtailment and encourage the energy transition in China

The pursuing of inter-regional power transmission to address renewable power curtailment in China has resulted in disappointing gains. This paper evaluates the case of local green ammonia production to address this issue. An improved optimization-based simulation model is applied to simulate lifetime green manufacturing, and the impacts of main institutional incentives and oxygen synergy on investment are analysed. Levelized cost of ammonia is estimated at around 820 USD/t, which is about twice the present price. The operating rate, ammonia price, the electrical efficiency of electrolysers and the electricity price are found to be the key factors in green ammonia investment. Carbon pricing and value-added tax exemption exert obvious influences on the energy transition in China. A subsidy of approximately 450 USD/t will be required according to the present price; however, this can be reduced by 100 USD/t through oxygen synergy. Compared to inter-regional power transmission, green ammonia production shows both economic and environmental advantages. Therefore, we propose an appropriate combination of both options to address renewable power curtailment and the integration of oxygen manufacturing into hydrogen production. We consider the findings and policy implications will contribute to addressing renewable power curtailment and boosting the hydrogen economy in China.     

Role of the GB-France electricity interconnectors in integration of variable renewable generation

The integration of large capacities of wind and solar generation into the France and Great Britain (GB) power systems is expected to pose significant operational challenges. Electricity interconnectors can play a role in facilitating the integration of renewable generation in neighbouring countries by allowing power to flow freely between power systems and therefore smooth the net electricity demand. In this paper, role of the electricity interconnectors in efficient balancing of supply and demand in the France and GB power systems was evaluated in terms of overall reduction in the operational costs and curtailment of renewable generation, and also its impact on operation of gas-fired plants. The value of the France-GB interconnectors was studied for two generation mix scenarios in 2030 using PLEXOS. The outputs of the modelling showed the interconnectors will result in larger amount of wind and solar to be absorbed by both power systems which consequently will reduce overall operational costs and CO₂ emissions. In addition, the interconnectors will reduce burden on gas-fired plants compensating for variation in wind and solar generation. This can have a significant value in operation and required investment of gas networks in both countries.     

Renewable electricity as a differentiated good? The case of the Republic of Korea

This paper examines the willingness for Korean consumers to pay a premium for renewable electricity under a differentiated good framework by applying the contingent valuation method. Korean consumers have been required to pay for their use of renewable electricity as of 2012. First, we find that Korean consumers recognise renewable electricity as a differentiated good from traditional electricity generated from fossil fuels or nuclear energy. The mean willingness to pay to use renewable electricity is USD 1.26 per month. Second, we confirm the existence of perfect substitution relationships among variant renewable technologies, which suggests that Korean consumers do not perceive them as differentiated goods. One reason for this perception is that Korean consumers are more inclined to favour economic feasibility over sustainability or the availability of the resource stock when choosing between renewable technology types. In sum, we can say that Korean consumers recognise renewable electricity as a differentiated good but that they do not differentiate between variant renewable technologies. Thus, the imposition of the cost of renewable electricity on consumers in the form of increased electricity charges would be acceptable to consumers as long as any price rise properly reflects their preferences.     

Federal policies for renewable electricity: Impacts and interactions

Three types of policies that are prominent in the federal debate over addressing greenhouse gas emissions in the United States are a cap-and-trade program (CTP) on emissions, a renewable portfolio standard (RPS) for electricity production, and tax credits for renewable electricity producers. Each of these policies would have different consequences, and combinations of these policies could induce interactions yielding a whole that is not the sum of its parts. This paper utilizes the Haiku electricity market model to evaluate the economic and technology outcomes, climate benefits, and cost-effectiveness of three such policies and all possible combinations of the policies. A central finding is that the carbon dioxide (CO₂) emissions reductions from CTP can be significantly greater than those from the other policies, even for similar levels of renewable electricity production, since of the three policies, CTP is the only one that distinguishes electricity generated by coal and natural gas. It follows that CTP is the most cost-effective among these approaches at reducing CO₂ emissions. An alternative compliance payment mechanism in an RPS program could substantially affect renewables penetration, and the electricity price effects of the policies hinge partly on the regulatory structure of electricity markets, which varies across the country.     

Joint electricity and carbon market for Northeast Asia energy interconnection

Decarbonization of the electricity sector is crucial to mitigate the impacts of climate change and global warming over the coming decades. The key challenges for achieving this goal are carbon emission trading and electricity sector regulation, which are also the major components of the carbon and electricity markets, respectively. In this paper, a joint electricity and carbon market model is proposed to investigate the relationships between electricity price, carbon price, and electricity generation capacity, thereby identifying pathways toward a renewable energy transition under the transactional energy interconnection framework. The proposed model is a dynamically iterative optimization model consisting of upper- level and lower-level models. The upper-level model optimizes power generation and obtains the electricity price, which drives the lower-level model to update the carbon price and electricity generation capacity. The proposed model is verified using the Northeast Asia power grid. The results show that increasing carbon price will result in increased electricity price, along with further increases in renewable energy generation capacity in the following period. This increase in renewable energy generation will reduce reliance on carbon-emitting energy sources, and hence the carbon price will decline. Moreover, the interconnection among zones in the Northeast Asia power grid will enable reasonable allocation of zonal power generation. Carbon capture and storage (CCS) will be an effective technology to reduce the carbon emissions and further realize the emission reduction targets in 2030-2050. It eases the stress of realizing the energy transition because of the less urgency to install additional renewable energy capacity.     

How much have electricity shortages hampered China's GDP growth?

Based on an econometric analysis of the annual growth data for China's GDP and electricity generation from 1953 to 2010, we find that electricity generation growth Granger causes GDP growth, but not vice versa. We also find that the GDP elasticity of electricity generation is about 0.6, implying that a 1% increase in China's electricity generation growth would increase GDP growth by 0.6%. While Deng's reform raised China's GDP growth rate by about 5% per year, it did not alter the GDP elasticity of electricity generation. Hence, an obvious strategy to promote China's economic growth would be accelerating electricity generation expansion. Rapidly adding thermal generation units, however, could have large-scale, adverse environmental impacts. We therefore support China's 2011 five-year plan, which calls for expanding investments in renewable energy, conservation and energy efficiency as well as improving China's integrated electricity planning and cost-based pricing decisions.     

Financial impact of energy efficiency under a federal combined efficiency and renewable electricity standard: Case study of a Kansas “super-utility”

Historically, local, state and federal policies have separately promoted the generation of electricity from renewable technologies and the pursuit of energy efficiency to help mitigate the detrimental effects of global climate change and foster energy independence. Federal policymakers are currently considering and several states have enacted a combined efficiency and renewable electricity standard which proponents argue provides a comprehensive approach with greater flexibility and at lower cost. We examine the financial impacts on various stakeholders from alternative compliance strategies with a Combined Efficiency and Renewable Electricity Standard (CERES) using a case study approach for utilities in Kansas. Our results suggest that an investor-owned utility is likely to pursue the most lucrative compliance strategy for its shareholders—one that under-invests in energy efficiency resources. If a business model for energy efficiency inclusive of both a lost fixed cost recovery mechanism and a shareholder incentive mechanism is implemented, our analysis indicates that an investor-owned utility would be more willing to pursue energy efficiency as a lower-cost CERES compliance strategy. Absent implementing such a regulatory mechanism, separate energy efficiency and renewable portfolio standards would improve the likelihood of reducing reliance on fossil fuels at least-cost through the increased pursuit of energy efficiency.