Strategic Decision-Making of Flexible Investments under Uncertainties in Long-Term Electricity Markets

In liberalized electricity markets, the investment postponement option is deemed to be decisive for understanding the addition of new generating capacity. Basically, it refers to the investors’ chance to postpone projects for a period while waiting for the arrival of new and better information about the market evolution. When such development involves major uncertainties, the generation business becomes riskier, and the investors’ “wait-and-see” behavior might limit the timely addition of new generation capacity. The literature provides solid empirical evidence about the occurrence of construction cycles in the deregulated electricity industry. However, the strategic flexibility inherent to defer investments in power plants has not been yet rigorously incorporated as an explicit input for investment signals in the revised long-term market models. Therefore, this paper proposes a new methodology to assess the long-term development of liberalized power markets based on a more realistic approach for valuing generation investments. The proposal is based on a stochastic dynamic market model, built upon a System Dynamics simulation approach. The model considers that the addition of new generation capacity is driven by the economic value of the strategic flexibility associated to defer investments under uncertainties. The value of the postponement option is quantified in monetary terms by means of Real Options analysis. Simulations explicitly confirm the cyclical behavior of the energy-only market in the long-run, as suggested by the empirical evidence found in the literature. Furthermore, the proposed method is used to test three regulatory schemes, implemented in order to dampen the arising construction cycles. Results show that, for ensuring the supply security in markets under huge uncertainties, investors would need complementary capacity incentives in order to deploy power generation investments in timely manner.CONACYT - Consejo Nacional de Ciencia y TecnologíaPROCIENCI

Adaptation of domestic state governance to international governance models

The purpose of the article is to provide the evolving international trends of modern management models and authorial vision of model of state governance system in Ukraine, its subsystems, in particular, the system of provision of administrative services that is appropriate for the contemporary times. Methodology. On the basis of scientific and theoretical approaches to the definitions of terms “state governance” and “public governance”, there was an explanation of considerable difference between them and, taking into consideration, the mentality of Ukrainian society and peculiar weak side in self-organization, the authors offered to form authorial model of governance on the basis of historically traditional for Ukraine model of state governance and to add some elements of management concepts that proved their significance, efficiency and priority in practice. Results. The authors emphasized the following two prevailing modern management models in the international practice: “new state management” and “good governance”. The first concept offered for consideration served as a basis for the semantic content of state activity that reflects more the state of administrative reformation. Practical meaning. A practical introduction of management to the domestic model of governance creates the range of contradictions that do not allow implementing herein concept. Pursuant to authors, the second one allows in considerable measure to reform state governance, considering historically developed peculiarities of this model. Moreover, the involvement of concept herein into introduction of informational and communicational technologies in the process of governance eliminates the necessity of power decentralization, it allows to form real net structure and, at the same, to keep vertical power structure, to involve citizens for formation and taking of management decisions, to form electronic communicational channel of feedback, to provide citizens with electronic administrative services. All indicated advantages of the concept certify about the necessity to reform state governance exactly in this field. Meaning/ Distinction. This article raises a question about the significance of formation and sequence of state policy in Ukraine aimed at creating an information-oriented society, space, as well as informational and technological infrastructure

A dynamic simulation of low-carbon policy influences on endogenous electricity demand in an isolated island system

This paper considers the dynamics of electricity demand in response to changes arising from low-carbon policies and socio-economic developments. As part of an investigation into the evolution of such systems on small economically-developed islands, endogenous electricity demand and associated policies are studied for the Azorean island of São Miguel. A comprehensive System Dynamics (SD) model covering the period 2005 − 2050 is presented which captures both historical behaviours and real-world influences on the endogenous demand dynamics of an island-based electricity system. The impact of tourism, energy efficiency and electric vehicles (EV) expansion allied with associated policy options, are critically evaluated by the SD model using a series of scenarios. The model shows that energy efficiency measures exhibit the most significant long-term impact on electricity demand, while in contrast, policies to increase tourism have a much less direct impact and EV expansion has thought-provoking impacts on the long-term demand, although this is not as influential as energy efficiency measures

Net structure of subject-to-subject relations in the management of the system of administrative services provision

The purpose of the work is to form the net structure of management of the system of administrative services provision on the basis of implementation of subject-to-subject interactions between state sector and civil society. Methodology. The methodology basis for the investigation is the abstract-logical analysis of theoretical and methodological backgrounds for management of relations and interactions. For the theoretical generalization and formation of net structure, there are used scientific recommendations of Ukrainian scientists regarding the necessity to implement subject-to-subject relations in the system of administrative services provision. Results. The investigations allowed confirming that the hierarchical structure of the state governance system does not give an opportunity to implement equal interaction between a subject of provision and a subject of an appeal as these relations have one – way communication and the feedback channel has a formal character. Moreover, the civil society is not considered by state sector to be a source of methods and ways to develop the system of state governance, in particular, the management system of administrative services provision. Practical meaning. The net structure of management will allow implementing the subject-subject relations in the system, under which the actions of the subject of provision – that means state sector – will be directed to the realization of rights and interests of the subjects of appeal. In their turn, apart from the performance of all legislative responsibilities that they should perform, they can carry out activities directed to the development of management activity in the system of administrative services provision and the whole system of state governance as an integral system of management. Meaning/Distinction. The provided model of the net structure will allow involving citizens in the processes of state governance and increasing the impact of the civil sector during the making of state and management decisions and, as a result, to confirm subject-to-subject positions in the relations