IDEAS home Printed from https://ideas.repec.org/a/spr/bioerq/v8y2023i4d10.1007_s41247-023-00116-6.html
   My bibliography  Save this article

A Simple Conceptual Model of Energy Transition

Author

Listed:
  • Rögnvaldur Hannesson

    (Norwegian School of Economics)

Abstract

A conceptual model of the electricity market is formulated. Demand can be either high or low, with given probabilities. Inflexible production units with high fixed cost supply the base load of low demand, while flexible units with lower fixed cost and rising marginal cost supply the rest. In a reference case, all production units cover exactly their fixed cost from inframarginal rents. Then a transition to renewable energy is analyzed. There is a certain probability that the renewable energy will not be available, but when it is, it supplies the previous base load. A back-up capacity to supply peak demand is assumed to be made available. The effect of availability of renewable energy on electricity price and fixed cost recovery is analyzed.

Suggested Citation

  • Rögnvaldur Hannesson, 2023. "A Simple Conceptual Model of Energy Transition," Biophysical Economics and Resource Quality, Springer, vol. 8(4), pages 1-6, December.
    • Handle: RePEc:spr:bioerq:v:8:y:2023:i:4:d:10.1007_s41247-023-00116-6
    DOI: 10.1007/s41247-023-00116-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s41247-023-00116-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s41247-023-00116-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gugler, Klaus & Haxhimusa, Adhurim & Liebensteiner, Mario, 2021. "Effectiveness of climate policies: Carbon pricing vs. subsidizing renewables," Journal of Environmental Economics and Management, Elsevier, vol. 106(C).
    2. Pär Holmberg & Robert A. Ritz, 2021. "Optimal Capacity Mechanisms for Competitive Electricity Markets," The Energy Journal, , vol. 42(1_suppl), pages 1-34, June.
    3. Johannes Mauritzen and Genaro Sucarrat, 2022. "Increasing or Diversifying Risk? Tail Correlations, Transmission Flows and Prices across Wind Power Areas," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    4. Johannes Mauritzen & Genaro Sucarrat, 2022. "Increasing or Diversifying Risk? Tail Correlations, Transmission Flows and Prices across Wind Power Areas," The Energy Journal, , vol. 43(3), pages 105-131, May.
    5. Paul L. Joskow, 2011. "Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies," American Economic Review, American Economic Association, vol. 101(3), pages 238-241, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Newbery, David M., 2023. "High renewable electricity penetration: Marginal curtailment and market failure under “subsidy-free” entry," Energy Economics, Elsevier, vol. 126(C).
    2. Helm, Carsten & Mier, Mathias, 2021. "Steering the energy transition in a world of intermittent electricity supply: Optimal subsidies and taxes for renewables and storage," Journal of Environmental Economics and Management, Elsevier, vol. 109(C).
    3. Neupane, Deependra & Kafle, Sagar & Karki, Kaji Ram & Kim, Dae Hyun & Pradhan, Prajal, 2022. "Solar and wind energy potential assessment at provincial level in Nepal: Geospatial and economic analysis," Renewable Energy, Elsevier, vol. 181(C), pages 278-291.
    4. Durmaz, Tunç, 2016. "Precautionary Storage in Electricity Markets," Discussion Papers 2016/5, Norwegian School of Economics, Department of Business and Management Science.
    5. Carsten Helm & Mathias Mier, 2020. "Steering the Energy Transition in a World of Intermittent Electricity Supply: Optimal Subsidies and Taxes for Renewables Storage," ifo Working Paper Series 330, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    6. Serhan Cevik, 2024. "Climate change and energy security: the dilemma or opportunity of the century?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 26(3), pages 653-672, July.
    7. Behrang Shirizadeh, Quentin Perrier, and Philippe Quirion, 2022. "How Sensitive are Optimal Fully Renewable Power Systems to Technology Cost Uncertainty?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    8. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    9. Simshauser, P., 2019. "On the impact of government-initiated CfD’s in Australia’s National Electricity Market," Cambridge Working Papers in Economics 1901, Faculty of Economics, University of Cambridge.
    10. repec:diw:diwwpp:dp1746 is not listed on IDEAS
    11. Emblemsvåg, Jan, 2022. "Wind energy is not sustainable when balanced by fossil energy," Applied Energy, Elsevier, vol. 305(C).
    12. Jeffrey C. Peters & Thomas W. Hertel, 2017. "Achieving the Clean Power Plan 2030 CO2 Target with the New Normal in Natural Gas Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    13. Zhang, Jiekuan, 2023. "Emissions trading scheme and energy consumption and output structure: Evidence from China," Renewable Energy, Elsevier, vol. 219(P1).
    14. Alexis Tantet & Philippe Drobinski, 2021. "A Minimal System Cost Minimization Model for Variable Renewable Energy Integration: Application to France and Comparison to Mean-Variance Analysis," Energies, MDPI, vol. 14(16), pages 1-38, August.
    15. Gawel, Erik & Lehmann, Paul & Purkus, Alexandra & Söderholm, Patrik & Witte, Katherina, 2017. "Rationales for technology-specific RES support and their relevance for German policy," Energy Policy, Elsevier, vol. 102(C), pages 16-26.
    16. Pejman Bahramian, 2021. "Integration of wind power into an electricity system using pumped-storage: Economic challenges and stakeholder impacts," Working Paper 1480, Economics Department, Queen's University.
    17. Severin Borenstein & James Bushnell, 2015. "The US Electricity Industry After 20 Years of Restructuring," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 437-463, August.
    18. Rubio-Domingo, G. & Linares, P., 2021. "The future investment costs of offshore wind: An estimation based on auction results," Renewable and Sustainable Energy Reviews, Elsevier, vol. 148(C).
    19. René Aïd & Matteo Basei & Huyên Pham, 2020. "A McKean–Vlasov approach to distributed electricity generation development," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 91(2), pages 269-310, April.
    20. Montrone, Lorenzo & Steckel, Jan Christoph & Kalkuhl, Matthias, 2022. "The type of power capacity matters for economic development – Evidence from a global panel," Resource and Energy Economics, Elsevier, vol. 69(C).
    21. La Monaca, Sarah & Ryan, Lisa, 2017. "Solar PV where the sun doesn’t shine: Estimating the economic impacts of support schemes for residential PV with detailed net demand profiling," Energy Policy, Elsevier, vol. 108(C), pages 731-741.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:bioerq:v:8:y:2023:i:4:d:10.1007_s41247-023-00116-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.