Environmental Engineering Reference
In-Depth Information
Regarding power generation in absolute terms, in the SP and GG portfolios gas
turbines are set to be the major producers. However, they only play a minor role in
the CB. In the latter, nuclear plants appear as the major providers.
The shares of coal and nuclear in power generation are higher than their shares in
installed capacity under the three future energy scenarios. The opposite is true for
gas-
red power plants. As for wind, its share of generation falls below that of
capacity in all cases except CB, where they are at par (around 30 %).
In the MVP framework we looked at the average electricity price and standard
volatility that result from each long-term power portfolio. GG and SP are almost
indistinguishable from each other, and AG is very close. CB clearly outperforms all
of them on both accounts, whether we focus on the typical scatter diagram or the
more informative target curves. On the other hand, carbon emissions can be used to
assess the performance of the above portfolios from an environmental viewpoint.
Again, the CB portfolio outperforms the others by a wide margin.
Economic ef
ciency can lead us to rely heavily on a low number of technolo-
gies. This can jeopardize security of supply. Further, it can also give rise to anti-
competitive practices or market power. We address these concerns by means of the
Shannon-Wiener diversity index and the Her
ndahl-Hirschman concentration
index. When applied to yearly averages of installed capacity and power delivered,
the four portfolios as of 2032 are reasonably diversi
ed. CB in particular is the most
diversied regarding capacity but the least so regarding production. At the same
time, the four portfolios are problematic in terms of exposure to supply risk. CB is
the least concentrated regarding capacity and the most concentrated regarding
production.
We perform a sensitivity analysis with respect to the carbon price
oor. In its
absence, carbon price is assumed to evolve according to a standard GBM. As could
be expected, the average electricity price is both lower and less volatile in the four
portfolios. Again, CB is the clear winner. On the other hand, it is no surprise that
carbon emissions are higher now that carbon prices can fall lower. The CB portfolio
outperforms the other three also on this ground.
Our model can be improved in several ways. One involves better characterizing
the strategic behavior of generators and the exercise of market power. Our model
does not address strategic investment decisions such as how much generation
capacity to add, and when to add it. These sequential investment decisions call for
further research.
Acknowledgments Abadie and Chamorro gratefully acknowledge nancial support from the
Spanish Ministry of Science and Innovation through the research project ECO2011-25064, the
Basque Government through the research project GIC12/177-IT-399-13, and Fundaci
รณ
n Repsol
through the Low Carbon Programme joint initiative. 15 Usual disclaimer applies.
15
http://www.lowcarbonprogramme.org .
 
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