A Federal Renewable Electricity Requirement

Rising energy prices and climate change have changed both the economics and politics of electricity. In response, over half the states have enacted "renewable portfolio standards" (RPS) that require utilities to obtain some power from "renewable" generation resources rather than carbon emitting fossil fuels. Reports of state-level success have brought proposals for a national standard. Like several predecessor Congresses, however, the most recent one failed to pass RPS legislation. Before trying one more time, legislators should ask why they favor a policy so politically correct and so economically suspect. Support for a national program largely stems from misleading claims about state-level successes, misunderstandings about how renewables interact with other environmental regulation, and misinformation about the actual benefits renewables create. State RPS programs are largely in disarray, and even the apparently successful ones have had little impact. California's supposedly aggressive program has left it with the same percentage of renewable power as in 1998, and Texas's seemingly impressive wind turbine investments produce only two percent of its electricity. The public may envision solar collectors but wind accounts for almost all of the growth in renewable power, and it largely survives on favorable tax treatment. Wind's intermittency reduces its efficacy in carbon control because it requires extra conventional generation reserves. Computer-generated predictions about a national RPS are generally unreliable, but they show that with or without one the great majority of generation investments for the next several decades will be fossil-fueled. Even without the technological and environmental shortcomings of renewables, the case for a national RPS is economically flawed. Emissions policies are moving toward efficient market-based trading systems and more rational setting of standards. A national RPS clashes with principles of efficient environmental policy because it is a technological requirement that applies to a single industry. Arguments that a national RPS will create jobs, mitigate energy price risks, improve national security and make the United Sates more competitive internationally are in the main restatements of elementary economic fallacies. It is hard to imagine a program that delivers as little in theory as a national RPS, and the experiences of the states indicate that it delivers equally little in practice

An Integrated Market for Electricity and Natural Gas Systems with Stochastic Power Producers

In energy systems with high shares of weather-driven renewable power sources, gas-fired power plants can serve as a back-up technology to ensure security of supply and provide short-term flexibility. Therefore, a tighter coordination between electricity and natural gas networks is foreseen. In this work, we examine different levels of coordination in terms of system integration and time coupling of trading floors. We propose an integrated operational model for electricity and natural gas systems under uncertain power supply by applying two-stage stochastic programming. This formulation co-optimizes day-ahead and real-time dispatch of both energy systems and aims at minimizing the total expected cost. Additionally, two deterministic models, one of an integrated energy system and one that treats the two systems independently, are presented. We utilize a formulation that considers the linepack of the natural gas system, while it results in a tractable mixed-integer linear programming (MILP) model. Our analysis demonstrates the effectiveness of the proposed model in accommodating high shares of renewables and the importance of proper natural gas system modeling in short-term operations to reveal valuable flexibility of the natural gas system. Moreover, we identify the coordination parameters between the two markets and show their impact on the system's operation and dispatch

Implementing Electricity Restructuring: Policies, Potholes, and Prospects

Electricity is one of the last U.S. industries in which competition is replacing regulation. We briefly review the technology for producing and delivering power, the history of electricity policy, and recent state and international experience. We then outline the major questions facing policymakers as they decide whether, when, and how to implement restructuring. We conclude with some thoughts on the California electricity crisis and other political controversies. Although the California experience has come to define what it means for electricity markets to fail, most of the problems it raised are among those we know how to solve or prevent. The still unresolved make-or-break issue remains whether the cooperation necessary to maintain reliability is compatible with the degree of competition necessary to bring about greater efficiency and lower prices. This paper draws upon our forthcoming book, Alternating Curents: Electricity Markets and Public Policy.electricity restructuring, regulation, deregulation

Liberalisation of European energy markets: challenges and policy options

The European electricity and gas markets have been going through a process of liberalisation since the early 1990s. This process has changed the sector from a regulated structure of, predominantly, publicly owned monopolists controlling the entire supply chain, into a market where private and public generators and retailers compete on a regulated and unbundled system of transport infrastructure. This report assesses the evidence of the effects of liberalisation on efficiency, security of energy supply and environmental sustainability.

Alaska Fuel Price Projections 2013-2035

The Alaska Fuel Price Projections are developed for the Alaska Energy Authority (AEA) for the purpose of estimating the potential benefits and costs of renewable energy projects. Project developers submit applications to AEA for grants awarded under the Alaska Renewable Energy Fund (REF) program process. These fuel price projections are used to evaluate the economic feasibility of project applications; economic feasibility is only one of many factors of the project evaluation process. In this report we present the methodology for the seventh fuel prices projection. In addition to their use for the REF review, the Institute of Social and Economic Research (ISER), University of Alaska Anchorage (UAA) uses the projections for other economic research and energy project evaluations. Economists at ISER have completed six previous Alaska Fuel Price Projections since 2008 (all available at: http://www.iser.uaa.alaska.edu/). The fuel price projections fulfill an important need for price information and are used by many stakeholders in addition to AEA. As a result of their broad use among the public, we expanded what used to be cursory notes on methodology. Our intent is to provide more detailed information to the report’s readers and users of the fuel price projections.Alaska Energy AuthorityIntroduction / Methods and Assumptions / Natural Gas / Fuel Oil / References / Appendix A. Projection Methodolog

Alaska Fuel Price Projections 2014-2040

The Alaska Fuel Price Projections are developed annually for the Alaska Energy Authority (AEA) for the purpose of estimating the potential costs and benefits of renewable energy projects. Project developers submit applications to AEA for grants awarded under the Alaska Renewable Energy Fund (REF) program. These fuel price projections are used to evaluate the economic feasibility of project applications; economic feasibility is only one of many factors of the project evaluation process. Economists at the Institute of Social and Economic Research (ISER), University of Alaska Anchorage (UAA) have completed seven previous Alaska Fuel Price Projections since 2008 (all available at: http://www.iser.uaa.alaska.edu/). In this report we present the methodology for the most recent fuel prices projection. In addition to their use for the REF review, ISER researchers use the projections for other economic research and energy project evaluations. The fuel price projections also fulfill an important need for price information and are used by many stakeholders in addition to AEA. As a result of their broad use among the public, we expanded what used to be cursory notes on methodology. Our intent is to provide more detailed information to the report’s readers and users of the fuel price projections.Alaska Energy AuthorityBackground / Projection vs. Forecast / Data Sources / Projections / References / Appendix A. Projection methodolog

Consequences of Electricity Restructuring on the Environment: a Survey

The aim of this paper is to assess theoretical consequences of restructuring electricity markets on the environment. We examine changes in potential behaviours in consumption-side as well as in supply-side. We show that restructuring and following access to competition is not neutral from an environmental standpoint. Deregulation could induce some negative externalities due to requirements in cost-effciency. The principal result of this paper is the need of strong incentives in public policies to compensate the new short-term horizon in which energy sector's firms are evolving, particularly concerning R&D.ELECTRICITY RESTRUCTURING; ENVIRONMENT; GREENHOUSE GAS EMISSIONS; REGULATION; INNOVATION.

Financial Risks of Investments in Coal

Analyzes the regulatory, commodity, and construction risks of investing in coal mining and coal-fired power plants. Examines industry analysts' consensus on viable alternatives to coal, including natural gas, solar, wind, and energy efficiency

Law & Economics Perspectives on Electricity Regulation

This paper first reviews some of the main contributions of the new institutional economics to the analysis of the process of competitive transformation of network industries. It shows that neoinstitutional analysis is complementary to the microeconomics of rational pricing, since it accounts for the decisive role of an institutional framework adapted to new transactions. It emphasizes the importance of the political reform process, which draws on the conditions of attractiveness and feasibility to define an initial reorganization of property rights in these industries. The paper then analyzes in this light some of the main challenges ahead for electricity regulation: the question of investment in generation capacities and the link to long term contracts, the regulation of wholesale market power, the support to Renewable Energy Sources for Electricity (RES-E) and the design of new regulatory authorities.Electricity Markets; New Institutional Economics; Law & Economics

Large Scale Deployment of Renewables for Electricity Generation

Comparisons of resource assessments suggest resource constraints are not an obstacle to the large-scale deployment of renewable energy technologies. Economic analysis identifies barriers to the adoption of renewable energy sources resulting from market structure, competition in an uneven playing field and various non-market place barriers. However, even if these barriers are removed, the problem of ‘technology lock-out’ remains. The key policy response is strategic deployment coupled with increased R&D support to accelerate the pace of improvement through market experience. The paper suggests significant contributions from various technologies, but does not assess their optimal or maximal market share