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Capacity choice and water management in hydroelectricity systems

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  • Haddad, Mohamed S.
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    Abstract

    This paper proposes a simple two-period model that captures the seasonal pattern of water inflows and electricity demand observed in many countries where hydropower is a major source of electricity supply. The model characterizes the effects of different inflows pattern on the optimal water management, capacity, and the associated electricity production and price. The first best capacity is a non-monotonic function of water inflows, which provides a rationale for the observed differences in reservoirs sizes across hydropower systems around the world. The monopoly solution is qualitatively similar to the first best outcome, and the privatization of hydroelectric power generation systems does not always imply a social welfare loss.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 33 (2011)
    Issue (Month): 2 (March)
    Pages: 168-177

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    Handle: RePEc:eee:eneeco:v:33:y:2011:i:2:p:168-177

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    Web page: http://www.elsevier.com/locate/eneco

    Related research

    Keywords: Water resource Hydroelectricity Dam size;

    References

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    1. Førsund, Finn R. & Hoel, Michael, 2004. "Properties of a non-competitive electricity market dominated by hydroelectric power," Memorandum 07/2004, Oslo University, Department of Economics.
    2. Crampes, C. & Moreaux, M., 2001. "Water resource and power generation," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 975-997, May.
    3. von der Fehr, Nils-Henrik M & Sandsbraten, Lise, 1997. " Water on Fire: Gains from Electricity Trade," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(2), pages 281-97, June.
    4. Stefan Ambec & Joseph Doucet, 2003. "Decentralizing hydro power production," Canadian Journal of Economics, Canadian Economics Association, vol. 36(3), pages 587-607, August.
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    Cited by:
    1. Dirk Rübbelke & Stefan Vögele, 2013. "Short-term distributional consequences of climate change impacts on the power sector: who gains and who loses?," Climatic Change, Springer, vol. 116(2), pages 191-206, January.
    2. Houba, Harold & Pham Do, Kim Hang & Zhu, Xueqin, 2012. "Transboundary Water Management: A joint management approach to the Mekong River Basin," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 125063, Australian Agricultural and Resource Economics Society.
    3. Abdessalem Abbassi & Ahlem Dakhlaoui & Lota D.Tamini, 2014. "Risk Aversion and Dynamic Games Between Hydroelectric Operators under Uncertainty," Cahiers de recherche CREATE 2014-4, CREATE.
    4. Houba, Harold & Pham Do, Kim Hang & Zhu, Xueqin, 2011. "Saving the Mekong River Basin," MPRA Paper 37407, University Library of Munich, Germany.

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