The use of “Bonus-Malus” schemes for promoting energy-efficient household appliances: a case study for Spain

32 p.Subsidies to promote the purchase of energy-efficient household appliances have been extensively used in many countries. This paper deals with the case of the Spanish rebate scheme, and proposes the use of both subsidies and taxes as a more effective way of promoting efficient appliances. The authors propose a sophisticated methodology for designing optimal combinations of taxes and subsides depending on different policy goals such as budget neutrality, increasing the proportion of efficient appliances, etc

Current expectations and actual values for the clean spark spread: The case of Spain in the Covid-19 crisis

The Covid-19 crisis has had a major impact on electricity markets, affecting power plant input and output prices. In this paper Spanish electricity and natural gas prices and international carbon prices are used to calculate the variable margin of natural gas combined cycles (NGCC), i.e. the Clean Spark Spread (CSS). The stochastic behavior of the CSS is modeled using an Ornstein-Uhlenbeck (OU) process because of its properties. The expected first semester 2020 CSS results based on the fitted model with daily 2016-2019 data, taking the end of 2019 as a starting point, are compared with the actual figures for the same period. In the first half of 2020 electricity and natural gas prices are significantly lower than expected at the end of 2019, but carbon allowance prices have decreased less in percentage terms. The monthly CSS values in the first half of 2020 are significantly lower than expected for March-May 2020, with the April value being -€4.15/WWh lower figure than the €7.16/MWh expected. This work calculates distributions of daily and monthly CSS values.This research is supported by the Basque Government through the BERC 2018–2021 programme and by the Spanish Ministry of the Economy and Competitiveness (MINECO) through BC3 María de Maeztu excellence accreditation MDM-2017-0714 . Further support is provided by the project MINECO RTI 2018-093352-B-I00

Climate change and heatwaves in the main coastal cities of the Basque Country

In this paper we analyse the probabilistic behaviour of heatwaves (HWs) in the main coastal cities of the Basque Country (Bayonne, Bilbao and Donostia-San Sebastian) in the twentyfirst century. We estimate HW behaviour using data from eight climate circulation models under two representative concentration pathways (RCP 8.5 and RCP 4.5). We model HWs according to three factors: number per annum, duration and intensity, including correlations, and find very different results for each climate model. This highlights the problem of using a single model. Under RCP 8.5, we find an expected mean excess over the 30C temperature threshold of 4.19C for Bayonne, 4.05C for Bilbao and 4.14C for Donostia-San Sebastian in 2100. These expected values are based on incomplete information, so we also calculate several risk measures. © 2020 Servicio Central Publicaciones. Gobierno vasco.This research is supported by the Basque Government through the BERC 2018-2021 programme and by the Spanish Ministry of the Economy and Competitiveness (MINECO) through BC3 Mar?a de Maeztu excellence accreditation MDM-2017-0714. Additionally, Luis M. Abadie gratefully acknowledges financial support from The Spanish Ministry of Science and Innovation (RTI2018-093352-B-I00). Marek Smid acknowledges the H2020 EU project COACCH-grant agreement N. 776479

A method for selecting a climate model: an application for maximum daily temperature in Southern Spain

General circulation models (GCM) show projections of climate variables that when downscaled can be applied to analyse future behaviour in different areas or places. Using them is possible not just to obtain expected values of climate variables but also to calculate their distributions and use those values to assess the effects of climate change at a local level. However, these calculations depend on the GCM selected. In this paper, daily maximum near-surface air temperatures from 21 climate models under representative concentration pathway (RCP) scenarios RCP 4.5 and RCP 8.5 and historic daily maximum temperatures (1990–2019) from nine cities in southern Spain are used with two objectives: first, to investigate past behaviour broken down into a deterministic part and a stochastic part; second, to compare historical data (2006–2019) with the information extracted from the 21 GCMs based on calculating goodness of fit in the period for both deterministic and stochastic parts. The methodology proposed may be useful in selecting a model or a range of models for use in a specific study. The results show positive historical and future trends in maximum daily temperature for these cities. The GCMs with the best fit for each city in this specific case are also presented.Open Access funding provided thanks to the CRUE-CSIC agreement with Springer Nature. This work was supported by María de Maeztu Excellence Unit 2023-2027 Ref. CEX2021-001201-M, funded by MCIN/AEI /10.13039/501100011033, by Basque Government IT1697-22 and by the Ministerio de Ciencia e Innovación (MCIN, Spain), Agencia Estatal de Investigación (AEI/10.13039/501100011033/) and Fondo Europeo de Desarrollo Regional (FEDER) “Una manera de hacer Europa” under the I+D+i research grant PID2020-112951GB-I00

Valuation of wind energy projects: A real options approach

27 p.This paper addresses the valuation of an operating wind farm and the …nite-lived option to invest in such a farm under di¤erent reward and/or support schemes. They range from a feed-in tari¤ to a premium on top of electricity market price, to a transitory subsidy to capital expenditure. The availability of futures contracts on electricity with ever longer matu- rities allows to undertake valuations based on market data. The model considers two sources of uncertainty, namely the future electricity price (which shows seasonality) and the level of wind generation (which is in- termittent in addition to seasonal). Lacking analytical solutions we resort to a trinomial lattice (which supports mean reversion in prices) combined with Monte Carlo simulation at each of the nodes in the lattice. Our data set refers to the UK. The numerical results show the impact of a number of factors involved in the decision to invest: the subsidy per unit of elec- tricity generated, the initial lump-sum subsidy, the investment option’s maturity, and price volatility

Optimal Slow Steaming Speed for Container Ships under the EU Emission Trading System

Slow steaming is an operational measure in ocean-going vessels sailing at slow speeds. It can help climate mitigation efforts by cutting down marine fuel consumption and consequently reducing CO2 and other Greenhouse Gas Emissions (GHG). Due to climate change both the European Union (EU) and the International Maritime Organization (IMO) are analysing the inclusion of international shipping in the EU Emissions Trading System (ETS) in the near future or alternatively implementing a carbon tax. The paper proposes a methodology to decide the optimal speed of a vessel taking into account its characteristics and the factors that determine its economic results. The calculated cash flow can be used in valuation models. The methodology is applied for a case study for any container ship in a range from 2000 to 20,000 Twenty-foot Equivalent Units (TEU) on a leg of a round trip from Shanghai to Rotterdam. We calculate how speed reduction, CO2 emissions and ship owner’s earnings per year may vary between a business-as-usual scenario and a scenario in which shipping is included in the ETS. The analysis reveals that the optimal speed varies with the size of the vessel and depends on several variables such as marine fuel prices, cargo freight rates and other voyage costs. Results show that the highest optimal speed is in the range of 5500–13,000 TEUs whether or not the ETS is applied. As the number of TEUs transported in a vessel increases emissions per TEU decrease. In an established freight rate market, the optimal speed fluctuates by 1.8 knots. Finally, the medium- and long-term expectations for slow steaming are analysed based on future market prices.This research is supported by the Basque Government through the BERC 2018–2021 programme and by the Spanish Ministry of Economy and Competitiveness (MINECO) through BC3 María de Maeztu excellence accreditation MDM-2017-0714. Further support is provided by the project MINECO RTI 2018-093352-B-I00

Old Wind Farm Life Extension vs. Full Repowering: A Review of Economic Issues and a Stochastic Application for Spain

The installation of wind power technology is growing steadily and the trend can be expected to continue if the objectives proposed by the European Commission are to be achieved. In some countries a considerable percentage of installed wind power capacity is near the end of its useful lifetime. In the case of Spain, the figure is 50% within five years. Over the last 20 years, wind energy technology has evolved considerably and the expected capacity factor has improved, thus increasing annual energy production, and capital expenditure and operational expenditure have decreased substantially. This paper studies the optimal decision under uncertainty between life extension and full repowering for a generic wind farm installed in the Iberian Peninsula when the future hourly electricity prices and the capacity factor evolve stochastically and seasonally. The results show that in economic terms, full repowering is the best option, with a net present value of €702,093 per MW installed, while reblading is the second best option. The methodology can be transferred to other specific wind farms in different electricity markets and can be used to develop national wind energy policy recommendations to achieve projected shares in the electricity mix.This research was funded by the Basque Government through the BERC 2018–2021 programme and by the Spanish Ministry of the Economy and Competitiveness (MINECO) through BC3 María de Maeztu excellence accreditation MDM-2017-0714. Further support is provided by the MINECO project RTI 2018-093352-B-I00

Powering newly constructed vessels to comply with ECA regulations under fuel market prices uncertainty: Diesel or dual fuel engine?

Over the last decade, marine engine engineering has evolved considerably, to the point where engine technology can be considered mature and reliable using LNG as fuel without affecting safety at sea. This paper analyses the choice between diesel or dual engines jointly and considers the alternatives of installing or not installing a sulphur scrubber when building a new vessel. The dual engine is more flexible because it can consume liquefied natural gas (LNG) as other marine fuels but the initial investment is more expensive. On the other hand, the use of scrubbers enables the use of marine fuels with high sulphur content in Emission Control Areas (ECAs), these marine fuels are usually cheaper also we consider Selective Catalytic Reduction technology (SCR) in all cases to minimize NOx. The paper calibrates a stochastic model for LNG and determines four marine fuel correlated prices. The work also considers a possible regulatory change from a non ECA to an ECA in the future. When we aggregate the installation costs to the present value of the expected combustible cost under uncertainty we can select the cheapest alternative. We obtain a minimum of expected present value of investment and fuels cost of 25.62 million US$ with a Dual engine with scrubber configuration. Our work shows that, in the cases considered, the use of a dual engine is the best alternative minimizing the total of investment and fuel costs. Finally, we analyse the distribution of fuel cost and its associated risks. © 2018 Elsevier LtdThis research is supported by the Basque Government through the BERC 2018-2021 program and by Spanish Ministry of Economy and Competitiveness MINECO through BC3 María de Maeztu excellence accreditation MDM-2017-0714. Additionally Luis M. Abadie is grateful for financial support received from the Basque Government via project GIC12/177-IT-399-13 and the Spanish Ministry of Science and Innovation via project ( ECO2015-68023 ).Basque Government, Spanish Ministry of Science and Innovation, Spanish Ministry of Economy and Competitiveness MINEC

Evaluation of two alternative carbon capture and storage technologies

4 p.* Carbon dioxide capture and storage (CCS) is one of the technologies for fighting climate change in the future. The use of CO2 for enhanced oil recovery (EOR) paired with storage in deep saline formations (DSF) could effectively help to support CCS demonstration projects, reduce costs and thus guarantee the future economic viability of power plants incorporating both EOR and CCS. * CCS without EOR is highly unprofitable at both current and expected carbon market prices. * The profitability of these technologies is highly influenced by the volatility of future electricity prices, oil prices and carbon allowance prices. * Investment in EOR and secondary DSF storage can only be profitable with a long-term equilibrium price for oil higher than $51/barrel. When the investment decision can be made at any time the trigger value for optimal investment is significantly higher at$89/barrel. However, an increase in the investment cost can substantially raise these trigger prices

Evaluation of a cross-border electricity interconnection: The case of Spain-France

[EN]This paper focuses on the economics of a cross-border transmission interconnector. The domestic spot electricity price is modelled as a stochastic process with mean reversion and jumps; it also includes a deterministic part that accounts for hourly and daily sasonalities along with non-working days. The two domestic spot prices are assumed to be correlated. As an illustration of the approach, we consider the particular case of the interconnector between Spain (an 'electric island') and France. Domestic prices are first calibrated and then used for simulating the stochastic behavior of the price gap between the two countries. In addition, the actual import/export behavior as a function of the price gap is captured by a Tobit model fitted from observed data. This model is then combined with the simulated price gaps to compute a multiple series of hourly prices and exports/imports of electricity through the interconnector. Drawing on these simulations we derive the probability distributions of revenues and expenses from exports and imports, and also some risk measures. According to our results, the economics of this interconector depends on different domestic seasonalities (hourly and daily), the growing trend of the price gap and some stochastic idiosyncrasies.This research is supported by the Basque Government through the BERC 2018-2021 programme and by the Spanish Ministry of Economy and Competitiveness (MINECO) through BC3 Maria de Maeztu excellence accreditation MDM20170714. Further support is provided by the project MINECO RTI 2018093352BI00