Developing countries - restructuring with benefits from competition (or not)

Many developing countries in Asia, Africa, Eastern Europe and South America are freeing up their electric energy industries in search of benefits from competition. These countries are on a fast-paced plan to implement restructuring despite the fact that the benefits from restructuring are yet to prove themselves in the more developed countries such as the US, Western Europe and Australia. The challenge is to develop a balance between introduction of competition, regulation and command and control. These countries need to conduct a comprehensive analysis and address a number of key considerations before proceeding with the decision to restructure their electric energy industries. They must also evaluate a number of considerations before selecting a specific market structure and proceeding with development of market design, rules and protocols. It is recommended that developing countries carefully study these considerations to ensure that the expected benefits from restructuring and privatizations are commensurate with its risks and costs. Finally, it is important to note that market rules and protocols cannot be developed in a vacuum and the market rules and protocols of the neighboring countries must be taken into account. This is especially important if the country under consideration requires energy through imports.     

Australian renewable energy progress

With some of the world's best solar and wind resources, Australia is a prime market for solar and wind energy. The growing renewable energy industry can take advantage of Australia's stable economy, good access to grid infrastructure and well organised financial and legal services.Although development has been slower than what was anticipated, but with the promises made by the new government, the renewable community hopes for a brighter future for solar and wind energy in Australia.The objective of this paper is to present an overview of the current status of solar and wind energy in Australia, then to take a closer look at solar and wind potential, current activities, and finally to discusses about Australian Government support and to predict the future outlook of solar and wind energy.     

Modelling the impacts of electric vehicle recharging on the Western Australian electricity supply system

This study investigates the potential impacts of EVs on the Western Australian electricity grid, the constraints on the system’s capacity to supply electricity for EV recharging and the options for managing those potential impacts and constraints. Western Australia is geographically isolated and the electricity network has no interconnection with neighbouring regions. The State energy and vehicle markets are independent of issues occurring in neighbouring states. Western Australia is a relatively clean sample space. This study eliminates uncertainty in vehicle adoption rates from analysis by assuming that all new vehicles are EVs. This gives a worst case scenario in terms of load growth and shows that it will over 200,000 EVs, which represents 10% of the fleet, before there is any significant impact on peak demand even if charging behaviours are left unfettered. The study also shows, however, that the electricity supply and transmission industry can achieve significant short- and long-term benefits if vehicle charging behaviours are managed from the outset, through, for example, demand management or structured tariffs. In the short-term, providing incentive for off-peak recharging increases utilisation of existing transmission capacity, and cheaper, more efficient base-load generation infrastructure. In the long-term, investment in more underutilised capacity can be avoided.     

Electricity market design for facilitating the integration of wind energy: Experience and prospects with the Australian National Electricity Market

Australia has been an early and enthusiastic adopter of both electricity industry restructuring and market-based environmental regulation. The Australian National Electricity Market (NEM) was established in 1999 and Australia also implemented one of the world's first renewable energy target schemes in 2001. With significant recent growth in wind generation, Australia provides an interesting case for assessing different approaches to facilitating wind integration into the electricity industry. Wind project developers in Australia must assess both potential energy market and Tradeable Green Certificate income streams when making investments. Wind-farm energy income depends on the match of its uncertain time varying output with the regional half hourly market price; a price that exhibits daily, weekly and seasonal patterns and considerable uncertainty. Such price signals assist in driving investments that maximize project value to the electricity industry as a whole, including integration costs and benefits for other participants. Recent NEM rule changes will formally integrate wind generation in the market's scheduling processes while a centralized wind forecasting system has also been introduced. This paper outlines experience to date with wind integration in the NEM, describes the evolution of market rules in response and assesses their possible implications for facilitating high future wind penetrations.     

Marginal reductions in vehicle emissions under a dual-blend ethanol mandate: Evidence from a natural experiment

Among the many reasons policy makers across the world have sought to supplement fuel supplies with ethanol-blended fuels are the cited environmental benefits that come with replacing a fossil-fuel with a cleaner burning alternative. Dual-blend ethanol mandates, in which multiple ethanol blends are simultaneously available, are one way policy markers can move forward with more aggressive mandates more quickly. The recent ethanol mandate in the state of New South Wales, Australia offers a unique natural experiment to quantify the potential environmental benefits and costs of a dual blend ethanol policy. This paper estimates the impact on carbon dioxide (CO₂) emissions from road-activity that are attributable to the implementation of the New South Wales ethanol requirements. We find that there was a decrease in emissions due to the policy, but that the decrease is relatively minor given the size of the market and that it comes at a high cost. The cost was over $1200 per ton of carbon to reduce gasoline emissions by just 1.2%.     

Societal acceptance of hydrogen for domestic and export applications in Australia

With the urgent need to decarbonise the world's energy system, clean hydrogen is emerging as a potential technological solution. As with any new technology, understanding the public's response to hydrogen is critical to its success. Most studies examining public attitudes towards hydrogen have focused on refuelling stations and transport options. As a first of its kind, using a national survey (N = 2785) we evaluate the Australian public's response towards hydrogen for domestic and export use. In Australia, acceptance of hydrogen in domestic applications was influenced by its relative cost, ability to reduce air pollution and associated health benefits. Further, support for a hydrogen export industry was influenced by levels of trust in the government to manage the associated risks and the industry's commitment to climate protection. The paper concludes that effective, nuanced communication and engagement along with supporting financial policies will be critical in facilitating societal acceptance of hydrogen in Australia.     

On the dynamic links between commodities and Islamic equity

This paper investigates whether commodities offer potential diversification benefits for Islamic equity index investors in light of possible financialization of commodity markets. Using MGARCH-DCC and Wavelet Coherence analyses, our findings reveal that correlations between commodity markets and the Dow Jones Islamic Market World Index are time-varying and highly volatile throughout the January 1999–April 2015 period. A substantial and persistent increase was observed in the return correlations between commodities and Islamic equity at the onset of the 2008 financial crisis. However, trends in the recent two years suggest that this association is heading towards its pre-crisis levels, offering again diversification benefits for Islamic equity holders. These benefits vary across different commodities in various time scales. Overall, gold, natural gas, soft commodities, grains and livestock are better portfolio diversifiers than oil and other metals. Relative to medium-to-long term investors, short-term investors (less than 32 days horizon) gained better diversification benefits in most commodities during bullish, bearish and market recovery periods. These findings have implications for investors who are heterogeneous in risk tolerance and time preference as well as for policymakers who are concerned with market stability.     

Barriers to clean development mechanism renewable energy projects in Mexico

Mexico is not reaching its full potential to capture benefits from clean development mechanism (CDM) projects because of its limited market for independent power producers (IPPs) and the barriers imposed on these entities by the state-run electric utility that controls most of the country's generation and transmission. This state-run entity has pursued CDM revenues only in isolated cases where international financial assistance was given because it is bound by law to pursue the least-cost generation option for its customers. Recent changes in Mexican legislation that provide incentives for renewable energy development could open the marketplace for these types of projects.     

Modelling how much extra motorists pay on the road? A cross-sectional study of profit margins of unleaded petrol in Australia

Gross profitability margin (difference between retail and wholesale prices) for unleaded petrol exhibits substantial variations across 108 cities, towns and regional centres in Australia. This paper examines if such variations (averaged during 2007–2012) can be explained by (a) transport costs proxied by the distance between retailers and wholesalers; (b) the size of the retail market; (c) market competition proxied by the number of cars in the vicinity of the retailers; (d) dummy variables capturing other qualitative attributes associated with the retailers’ locations. Three cross-sectional regressions are estimated but only one successfully passes all diagnostic tests. By identifying a number of locations exhibiting excessive profit margins, the results of this paper enhance the efficiency and transparency of petrol pricing in the retail market. It is found that the extent of excessive profiteering in Western Australia (WA) and South Australia (SA) were lower than other Australian states and territories. This important finding can be explained by a strong presence of independent petrol stations in SA and the successful price-monitoring performance of FuelWatch in WA.     

Assessing the potential for concentrated solar power development in rural Australia

This paper identifies the potential for concentrated solar power (CSP) to generate electricity in a rural region of Western Australia. A review of policies designed to stimulate the contribution of renewable sources highlights the continued reliance upon fossil fuels to supply current and future electricity needs in Australia. Potential CSP sites are defined in the Wheatbelt region of Western Australia through overlaying environmental variables and electricity infrastructure on a high resolution grid using widely available datasets and standard geographical information system (GIS) software. The analysis confirms that CSP facilities can be sited over large areas of the Wheatbelt which can be tailored to local patterns of supply and demand. The research underlines the necessity to develop a policy regime which actively supports and stimulates CSP in order to capitalize upon its potential to facilitate rural economic development while contributing towards greenhouse gas emission reduction targets.     

Using vehicle-to-grid technology for frequency regulation and peak-load reduction

This paper explores the potential financial return for using plug-in hybrid electric vehicles as a grid resource. While there is little financial incentive for individuals when the vehicle-to-grid (V2G) service is used exclusively for peak reduction, there is a significant potential for financial return when the V2G service is used for frequency regulation. We propose that these two uses for V2G technology are not mutually exclusive, and that there could exist a “dual-use” program that utilizes V2G for multiple uses simultaneously. In our proposition, V2G could be used for regulation on a daily basis to ensure profits, and be used for peak reduction on days with high electricity demand and poor ambient air quality in order to reap the greatest environmental benefits. The profits for the individual in this type of dual-use program are close to or even higher than the profits experienced in either of the single-use programs. More importantly, we argue that the external benefits of this type of program are much greater as well. At higher V2G participation rates, our analysis shows that the market for regulation capacity could become saturated by V2G-based regulation providers. At the same time, there is plenty of potential for widespread use of V2G technology, especially if the demand for regulation, reserves, and storage grows as more intermittent renewable resources are being incorporated into the power systems.     

Integrating climate change mitigation and adaptation: Refining theory for a mathematical framework to quantify private and public cost-effectiveness,and C emissions for energy and development projects

This work builds on a bottom-up market greenhouse gas (GHG) mitigation approach to determine the mitigation potential of specific activities by introducing two new concepts: the “adaptation potential” (defined as the difference between the sum of costs and benefits of adaptation, over a specified interval), and; “no behest” opportunities (defined as when the benefits of an activity equal or exceed both the costs to the private investor and the society, excluding the benefits of avoided climate change). “No behest” activities are contrasted with “no regrets” opportunities, whose benefits are equal to, or exceed costs to society, excluding the benefits of avoided climate change. The word “behest” conveys the value of requiring little further incentive or regulation to motivate private investors to take advantage of existing economic opportunities. Therefore, “no behest” opportunities are similar to “no regrets” opportunities, but with a greater relevance to private investments that both mitigate and adapt by including the real market benefits and costs of cleaner development options. This work utilises several mathematical methods to remove information asymmetries between market decision-making and what is both economically and environmentally efficient. These methods can be used for both contextually based bottom-up and top-down scenarios in either an adaptation and mitigation framework. The outputs are a quantified change in profitability and parallel GHG emissions of specific activity baselines that are suitable for carbon (C) liability assessment, investment and government emission targets in the current and projected policy environments. These methods can also be used to determine “no behest” activities which have lower private barriers to implementation than “no regrets” activities.     

Congestion management through topological corrections: A case study of Central Western Europe

The integration of an increasing amount of renewable generation within Europe is posing operational challenges that require various balancing actions. System operators therefore need to rely increasingly on the active control of the transmission network. Transmission topology control is a fast and economical option to add flexibility to the transmission system. We model the current methodology for controlling congestion in the Central Western European (CWE) market and quantify the benefits of topology control. We also compare the results with a nodal pricing model. Our computational results suggest that topology control can significantly reduce congestion management costs under the current market coupling regime whereas the benefits of topology control are limited under nodal pricing. Topology control emerges as an attractive and implementable means of managing congestion as it provides a significant percentage of the cost savings that would be achieved by overhauling the existing European market design and shifting to a nodal pricing regime.     

考虑电价风险的水电站长期优化调度及风险评估

研究了电价的不确定性给电力市场环境下水电站长期优化调度带来的风险,建立了基于VaR的期望—风险效用函数模型。借鉴于金融学中的VaR风险度量方法计量并评估风险,运用进化规划算法求解模型,并给出算例对模型进行了验证,分析说明如何应用风险评估方法进行风险度量和评估。     

全球太阳能热利用行业激励政策及对我国的启示

太阳能热利用是一种重要的可再生能源,在我国已经实现了商业化运行。如何支持已实现了商业化运行的太阳能热利用行业,是目前可再生能源政策研究的热点问题。本文研究分析了立法、财政补贴和间接市场等激励政策的适用环境,剖析了欧盟、西班牙、以色列和澳大利亚等国家和地区的现行激励政策,针对我国的产业发展现状,提出了相应的政策建议。     

Risk adjusted financial costs of photovoltaics

Recent research shows significant differences in the levelised photovoltaics (PV) electricity cost calculations. The present paper points out that no unique or absolute cost figure can be justified, the correct solution is to use a range of cost figures that is determined in a dynamic power portfolio interaction within the financial scheme, support mechanism and industry cost reduction. The paper draws attention to the increasing role of financial investors in the PV segment of the renewable energy market and the importance they attribute to the risks of all options in the power generation portfolio. Based on these trends, a former version of a financing model is adapted to project the energy mix changes in the EU electricity market due to investors behaviour with different risk tolerance/aversion. The dynamic process of translating these risks into the return expectation in the financial appraisal and investment decision making is also introduced. By doing so, the paper sets up a potential electricity market trend with the associated risk perception and classification. The necessary risk mitigation tasks for all stakeholders in the PV market are summarised which aims to avoid the burden of excessive risk premiums in this market segment.     

Developing markets for renewable energy technologies

Although renewable energy resources are now being utilised more on a global scale than ever before, there is no doubt their contribution to the energy economy can still be greatly increased. Recently international support for developing these relatively new sources of energy has been driven by their benefits as assessed by reduced environmental impact, particularly reduced greenhouse gas emissions.After several decades of continuous but somewhat erratic funding for research and development of renewables, it is time to take stock of the key issues to be addressed in terms of implementation of major renewable energy programmes on a large scale worldwide. One of the first steps in this process is the identification and encouragement of reliable continuous markets both in developed and developing nations. Future energy policy and planning scenarios should take into account the factors necessary to integrate renewables in all their diverse forms into the normal energy economy of the country.Other critical factors in market development will include the mass production of high quality, reliable and reasonable cost technical products and the provision of adequate finance for demonstrating market ready and near market renewables equipment.Government agencies need to aid in the removal of legislative and institutional barriers hindering the widespread introduction of non-conventional energy sources and to encourage the implementation of government purchasing schemes.Recent moves by companies in Australia to market ‘green energy’ to customers should also aid in the public awareness of the ultimate potential of renewables leading to greater use in the industrial, commercial and domestic sectors.     

Regulatory potential for increasing small scale grid connected photovoltaic (PV) deployment in Australia

The last decade has seen significant innovation and change in regulatory incentives to support photovoltaic deployment globally. With high fossil fuel dependency and abundant solar resource availability in Australia, grid connected photovoltaics are a viable low carbon technology option in existing electricity grids. Drawing on international examples, the potential to increase grid PV deployment through government response and regulation is explored. For each renewable energy certificate (REC) earned by small scale photovoltaics until 2012, the market provides four additional certificates under the current banded renewable targets. Our analysis indicates that REC eligibility is not accurately estimated currently, and an energy model is developed to calculate the variance. The energy model estimates as much as 26% additional REC’s to be obtained by a 3 kWp PV system, when compared to the currently used regulatory method. Moreover, the provision of REC’s increases benefits to PV technologies, in the process distorting CO₂ abatement (0.21 tonne/REC) by 68%, when PV displaces peaking natural gas plants. Consideration of the secondary effects of a banded structure on emissions trading market is important in the context of designing a range of initiatives intended to support a transition to a low carbon electricity sector.     

Renewable energy policies in promoting financing and investment among the East Asia Summit countries: Quantitative assessment and policy implications

Many countries have implemented various policies for renewable energy development ranging from setting power purchase agreements and the legislation of renewable energy requirements to providing incentives and imposing carbon taxes. The evaluation of the effectiveness of such policies, however, is fragmented, which raises a need for a comprehensive analysis. This paper aims to assess whether and how policies promoting renewable energy investment have achieved the intended goals. It employs five broadly defined criteria - market, uncertainty, profitability, technology, and financial resources - to build an index to assess respectively if such policies have helped create a market for renewable energy, maximize potential profits, reduce risks relating to the investment, develop and adopt new technologies, and improve the access to financial resources. Each criterion is reflected by three indicators. Values of each indicator are converted into ordinal values for analysis. The index not only scans comprehensively all relevant renewable energy investment policies in the East Asia Summit countries, but also provides systematic and quantitative measures to compare the effectiveness of policies in these countries with respect to the creation of market, the degree of uncertainty, the potential of profitability, the development and adoption of technology and the accessibility of financial resources.     

Economic analysis of upgrading aging residential buildings in China based on dynamic energy consumption and energy price in a market economy

This article employed a standard LCC to conduct economic analysis of upgrading the aging residential buildings in China. According to the current situation, an interest rate of 6%, an inflation rate of 3%, an increase rate of annual energy savings of 2% and an increase rate of electricity price of 2% were assumed in the method. The results indicated that only relying on gradually increasing electricity price and governments' subsidies was not enough. After detailed analysis of the energy saving measures and the distribution of all benefits from building energy retrofit, it was found that actually only 1/3 of original cost was spent only for energy savings, the second 1/3 for both energy savings and good façade appearance and occupants should share the last 1/3 because even if without energy retrofit, they would have to pay the part too. The corresponding results proved that the first 1/3 of investment cost could be drawn back within the residue life cycle, and so the investment could be accepted in a sheer market economy. In the end, a model about distribution of investment cost of and benefits was proposed to adapt the market economy to overcome the financial problems in China.