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An economic evaluation of the potential for distributed energy in Australia

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Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO) recently completed a major study investigating the value of distributed energy (DE; collectively demand management, energy efficiency and distributed generation) technologies for reducing greenhouse gas emissions from Australia’s energy sector (CSIRO, 2009). This comprehensive report covered potential economic, environmental, technical, social, policy and regulatory impacts that could result from the wide scale adoption of these technologies. In this paper we highlight the economic findings from the study. Partial Equilibrium modeling of the stationary and transport sectors found that Australia could achieve a present value welfare gain of around $130 billion when operating under a 450 ppm carbon reduction trajectory through to 2050. Modeling also suggests that reduced volatility in the spot market could decrease average prices by up to 12% in 2030 and 65% in 2050 by using local resources to better cater for an evolving supply-demand imbalance. Further modeling suggests that even a small amount of distributed generation located within a distribution network has the potential to significantly alter electricity prices by changing the merit order of dispatch in an electricity spot market. Changes to the dispatch relative to a base case can have both positive and negative effects on network losses.

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Paper provided by School of Economics, University of Queensland, Australia in its series Energy Economics and Management Group Working Papers with number 16.

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Date of creation: Feb 2012
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Handle: RePEc:qld:uqeemg:16

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Keywords: Distributed energy; Economic modeling; Carbon price; Electricity markets;

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Cited by:
  1. Wagner, Liam & Molyneaux, Lynette & Foster, John, 2014. "The magnitude of the impact of a shift from coal to gas under a Carbon Price," Energy Policy, Elsevier, vol. 66(C), pages 280-291.
  2. Curtis, John & di Cosmo, Valeria & Deane, Paul, 2014. "Climate Policy, Interconnection and Carbon Leakage: The Effect of Unilateral UK Policy on Electricity and GHG Emissions in Ireland," Papers RB2014/1/7, Economic and Social Research Institute (ESRI).
  3. John Foster & Liam Wagner & Liam Byrnes, 2014. "A Review of Distributed Generation for Rural and Remote Area Electrification," Energy Economics and Management Group Working Papers 3-2014, School of Economics, University of Queensland, Australia.
  4. Lynette Molyneaux & Craig Froome & Liam Wagner & John Foster, 2012. "Australian Power: Can renewable technologies change the dominant industry view?," Energy Economics and Management Group Working Papers 13-2012, School of Economics, University of Queensland, Australia.

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