Electricity Prices, River Temperatures and Cooling Water Scarcity
AbstractThermal-based power stations rely on water for cooling purposes. These water sources may be subject to incidents of scarcity, environmental regulations and competing economic concerns. This paper analyses the effect of water scarcity and increased river temperatures on German electricity prices from 2002 to 2009. Having controlled for demand effects, the results indicate that the electricity price is significantly impacted by both a change in river temperatures and the relative abundance of river water. An implication is that future climate change will affect electricity prices not only through changes in demand, but also via increased water temperatures and scarcity.
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Bibliographic InfoPaper provided by Department of Economics, Norwegian School of Economics in its series Discussion Paper Series in Economics with number 18/2011.
Length: 29 pages
Date of creation: 22 Sep 2011
Date of revision:
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Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
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Fax: 5595 9100
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More information through EDIRC
Thermal-based power; water scarcity.;
Other versions of this item:
- McDermott, Grant R. & Nilsen, Øivind Anti, 2012. "Electricity Prices, River Temperatures and Cooling Water Scarcity," IZA Discussion Papers 6842, Institute for the Study of Labor (IZA).
- Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-22 (All new papers)
- NEP-CIS-2011-10-22 (Confederation of Independent States)
- NEP-ENE-2011-10-22 (Energy Economics)
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