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Is There an Optimal Entry Time for Carbon Capture and Storage? A Case Study for Australia's National Electricity Market

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Abstract

This paper examines the economic competitiveness of implementing Carbon Capture and Storage (CCS) for deployment on the Australia’s National Electricity Market (NEM) against conventional base load electricity generation. By examining the Levelised Cost of Energy (LCOE) for sent out generation as a suitable hurdle for judging the future prospects of different technology types, we examine the likely mix of generation assets that could be invested in. After examining the LCOE it is shown that CCS enabled technologies will not be competitive in Australia until 2025, which is well beyond the first emissions reduction target for 2020.

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  • Liam Wagner & John Foster, 2011. "Is There an Optimal Entry Time for Carbon Capture and Storage? A Case Study for Australia's National Electricity Market," Energy Economics and Management Group Working Papers 07, School of Economics, University of Queensland, Australia.
  • Handle: RePEc:qld:uqeemg:07
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    12. E. Bompard & Y. C. Ma & E. Ragazzi, 2006. "Micro-economic analysis of the physical constrained markets: game theory application to competitive electricity markets," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 50(1), pages 153-160, March.
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    15. Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-1277, November.
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    Cited by:

    1. Molyneaux, Lynette & Wagner, Liam & Foster, John, 2016. "Rural electrification in India: Galilee Basin coal versus decentralised renewable energy micro grids," Renewable Energy, Elsevier, vol. 89(C), pages 422-436.
    2. Andreas Schröder & Friedrich Kunz & Jan Meiss & Roman Mendelevitch & Christian von Hirschhausen, 2013. "Current and Prospective Costs of Electricity Generation until 2050," Data Documentation 68, DIW Berlin, German Institute for Economic Research.
    3. Patrick Hamshere & Liam Wagner, 2012. "Potential Impacts of Subprime Carbon on Australia’s Impending Carbon Market," Energy Economics and Management Group Working Papers 14, School of Economics, University of Queensland, Australia.
    4. Molyneaux, Lynette & Brown, Colin & Wagner, Liam & Foster, John, 2016. "Measuring resilience in energy systems: Insights from a range of disciplines," Renewable and Sustainable Energy Reviews, Elsevier, pages 1068-1079.
    5. John Foster, 2014. "Energy, knowledge and economic growth," Journal of Evolutionary Economics, Springer, pages 209-238.
    6. Barry Ball & Bertram Ehmann & John Foster & Craig Froome & Ove Hoegh-Guldberg & Paul Meredith & Lynette Molyneaux & Tapan Saha & Liam Wagner, 2011. "Delivering a Competitive Australian Power System. Part 1: Australia’s Global Position," Energy Economics and Management Group Working Papers 13, School of Economics, University of Queensland, Australia.
    7. Byrnes, Liam & Brown, Colin & Wagner, Liam & Foster, John, 2016. "Reviewing the viability of renewable energy in community electrification: The case of remote Western Australian communities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 470-481.
    8. John Foster & Liam Wagner & Alexandra Bratanova, 2014. "LCOE models: A comparison of the theoretical frameworks and key assumptions," Energy Economics and Management Group Working Papers 4-2014, School of Economics, University of Queensland, Australia.
    9. repec:eee:energy:v:135:y:2017:i:c:p:726-739 is not listed on IDEAS
    10. Bratanova, Alexandra & Robinson, Jacqueline & Wagner, Liam, 2015. "Modification of the LCOE model to estimate a cost of heat and power generation for Russia," MPRA Paper 65925, University Library of Munich, Germany.
    11. Foster, John & Wagner, Liam & Liebman, Ariel, 2015. "Modelling the Electricity and Natural Gas Sectors for the Future Grid: Developing Co-Optimisation Platforms for Market Redesign," MPRA Paper 70114, University Library of Munich, Germany.
    12. Foster, John & Wagner, Liam & Liebman, Ariel, 2017. "Economic and investment models for future grids: Final Report Project 3," MPRA Paper 78866, University Library of Munich, Germany.
    13. Alexandra Bratanova & Jacqueline Robinson & Liam Wagner, 2012. "Energy cost modelling of new technology adoption for Russian regional power and heat generation," Energy Economics and Management Group Working Papers 9-2012, School of Economics, University of Queensland, Australia.

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    Keywords

    Levelised Cost of Energy; Electricity Generation; Emissions Reduction; Carbon Capture and Storage;

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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