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Low-carbon investments from the perspective of electric utilities: The burden of the past

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  • Shoai-Tehrani, Bianka
  • Akimoto, Keigo
  • Sano, Fuminori

Abstract

Within the Paris agreement, Europe has adopted ambitious climate targets. Achieving these targets through appropriate low-carbon investments is thus key. This study aims at providing new insight into this issue by considering the DNE21 + model, an optimization model that assesses global energy systems, and the Investment Preference Index model, a simulation model where decision-making is based on technology preferences from a utility's perspective. We evaluate the impact of a climate-policy scenario on the European electricity sector using these models with harmonized assumptions. The resulting investment choices provide insight into the effectiveness of a low-carbon investment policy. We find that various types of incentives are required before companies abandon their historical preferences and low-carbon technologies can flourish. Testing various options has revealed that a negative constraint on coal is more efficient than adding further positive incentives for low-carbon technologies (such as carbon pricing and support schemes). However, we also expect these preferences to shift over time.

Suggested Citation

  • Shoai-Tehrani, Bianka & Akimoto, Keigo & Sano, Fuminori, 2018. "Low-carbon investments from the perspective of electric utilities: The burden of the past," Utilities Policy, Elsevier, vol. 51(C), pages 18-32.
    • Handle: RePEc:eee:juipol:v:51:y:2018:i:c:p:18-32
    DOI: 10.1016/j.jup.2018.02.004
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    References listed on IDEAS

    as
    1. Eppinger, Steven D. & Browning, Tyson R., 2012. "Design Structure Matrix Methods and Applications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262017520, December.
    2. Bianka Shoai Tehrani & Pascal da Costa, 2013. "3 investment scenarios for generation IV nuclear reactors," Post-Print hal-01784382, HAL.
    3. Fuminori Sano & Keigo Akimoto & Kenichi Wada, 2014. "Impacts of different diffusion scenarios for mitigation technology options and of model representations regarding renewables intermittency on evaluations of CO 2 emissions reductions," Climatic Change, Springer, vol. 123(3), pages 665-676, April.
    4. Akimoto, Keigo & Sano, Fuminori & Homma, Takashi & Oda, Junichiro & Nagashima, Miyuki & Kii, Masanobu, 2010. "Estimates of GHG emission reduction potential by country, sector, and cost," Energy Policy, Elsevier, vol. 38(7), pages 3384-3393, July.
    5. Jean-Marie Chevalier & Michel Cruciani & Patrice Geoffron, 2013. "Transition énergétique : les vrais choix," Post-Print hal-01496236, HAL.
    6. repec:dau:papers:123456789/12044 is not listed on IDEAS
    7. Blyth, William & McCarthy, Rory & Gross, Robert, 2015. "Financing the UK power sector: Is the money available?," Energy Policy, Elsevier, vol. 87(C), pages 607-622.
    8. Bianka Shoai Tehrani & Toshimasa Tomoda & Jean-Claude Bocquet, 2014. "Electricity Investments and Nuclear Development: Investment Choice Modeling based on Value Creation," Post-Print hal-01785690, HAL.
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    Cited by:

    1. Tao, Zhenmin & Moncada, Jorge Andres & Delarue, Erik, 2023. "Exploring the impact of boundedly rational power plant investment decision-making by applying prospect theory," Utilities Policy, Elsevier, vol. 82(C).

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