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Potential gains of long-distance trade in electricity

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  • López Prol, Javier
  • Steininger, Karl W.
  • Williges, Keith
  • Grossmann, Wolf D.
  • Grossmann, Iris

Abstract

Electrification of all economic sectors and solar photovoltaics (PV) becoming the lowest-cost electricity generation technology in ever more regions give rise to new potential gains of trade. We develop a stylized analytical model to minimize unit energy cost in autarky, open it to different trade configurations, and evaluate it empirically. We identify large potential gains from interhemispheric and global electricity trade by combining complementary seasonal and diurnal cycles. The corresponding high willingness to pay for large-scale transmission suggests far-reaching political economy and regulatory implications.

Suggested Citation

  • López Prol, Javier & Steininger, Karl W. & Williges, Keith & Grossmann, Wolf D. & Grossmann, Iris, 2023. "Potential gains of long-distance trade in electricity," Energy Economics, Elsevier, vol. 124(C).
    • Handle: RePEc:eee:eneeco:v:124:y:2023:i:c:s0140988323002372
    DOI: 10.1016/j.eneco.2023.106739
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    More about this item

    Keywords

    Economic development; Electrification; Renewables; Gains of trade;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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