PESD - Publications Page
This paper identifies the key features of successful electricity market designs that are particularly relevant to the experience of low-income countries. Important features include: (1) the match between the short-term market used to dispatch generation units and the physical operation of the electricity network, (2) effective regulatory and market mechanisms to ensure long-term generation resource adequacy, (3) appropriate mechanisms to mitigate local market power, and (4) mechanisms to allow the active involvement of final demand in a short-term market.
In this report we identify the key drivers of observed market outcomes in the Colombian electricity supply industry during the fourth quarter of 2015 and first quarter of 2016, the time period covered by the most recent El Niño Event. We analyze how effective the market rules and market structure of Colombian electricity supply industry are in managing El Niño Events.
A spatial equilibrium model of the world coal market is developed that accounts for coal to natural gas switching in the electricity sector in the United States and Europe, the potential for China to exercise monoposony power in its coal purchasing behavior, and the impact of increasing the western US coal export port capacity. The global coal market equilibrium is computed as the solution to a nonlinear complementarity problem. Where possible parameters of the model are estimated econometrically.
Level versus Variability Trade-offs in Wind and Solar Generation Investments: The Case of California
Hourly plant-level wind and solar generation output and real-time price data for one year from the California ISO control area is used to estimate the vector of means and the contemporaneous covariance matrix of hourly output and revenues across all wind and solar locations in the state. Annual hourly output and annual hourly revenues mean/standard deviation efficient frontiers for wind and solar resource locations are computed from this information.
Designing Nonlinear Price Schedules for Urban Water Utilities to Balance Revenue and Conservation Goals
This paper formulates and estimates a household-level, billing-cycle water demand model under increasing block prices that accounts for the impact of monthly weather variation, the amount of vegetation on the household’s property, and customer-level heterogeneity in demand due to household demographics. The model utilizes US Census data on the distribution of household demographics in the utility’s service territory to recover the impact of these factors on water demand. An index of the amount of vegetation on the household’s property is obtained from NASA satellite data.
Railroad regulation in the post-Staggers Act regime compares the revenues earned to a measure of the “variable cost” of the shipment. While revenues are readily observed, the “variable cost” is calculated using the “Uniform Rail Costing System” (URCS) that was developed by the Interstate Commerce Commission. We characterize the properties of the URCS rail costing methodology and its role in rate regulation, and we assess whether it produces an economically valid estimate of the cost caused by a rail shipment.
Coal has been the world's fastest-growing energy source in absolute terms for over a decade. Coal also emits more CO2 than any other fossil fuel and contributes to serious air pollution problems in many regions of the world. If we hope to satisfy the demand for affordable energy in emerging economies while protecting the environment, we need to develop a keen understanding of the market that supplies coal. This book offers an in-depth analysis of the key producers and consumers that will most influence coal production, transport, and use in the future.
The authors ran a game-based simulation of an electricity market with both an RPS and a cap-and-trade market for greenhouse gas emissions allowances. High renewable energy shares reduced and shifted the output of thermal units and pushed down both electricity and carbon prices. The markets for renewable energy, carbon allowances, and spot and forward electricity interacted in complex ways that are relevant to the behavior of actual markets.
Significant political barriers to implementing na- tional climate policies exist in both the US and China. Successful linkage of regional climate policies in the two countries can help overcome these impediments. Each country can be seen as willing to cooperate with the other to address the global climate challenge, which can help each national government overcome the resistance to formulating its own national climate policy.
Last week, Stanford's Board of Trustees announced that the university would not directly invest funds from its endowment in coal mining companies. Even the strongest advocates of this action acknowledge that it is a symbolic gesture with little direct effect on the coal industry or global greenhouse gas emissions. But if a university administration wants to take symbolic (or real) action on climate change, is coal investment a wise choice?
The desire to "reboot" the New Zealand electricity supply industry is understandable, but it is almost certainly not the best course of action. As a participant in many electricity industry restructuring processes around the world, one important lesson that I have learned is that all reforms start with significant unintended defects that can only be eliminated through a rigorous ongoing analysis of market outcomes and targeted regulatory reforms.
‘Oorja’ in India: Assessing a large-scale commercial distribution of advanced biomass stoves to households
Replacing traditional stoves with advanced alternatives that burn more cleanly has the potential to ameliorate major health problems associated with indoor air pollution in developing countries. With a few exceptions, large government and charitable programs to distribute advanced stoves have not had the desired impact.
With the continued successful operation of its greenhouse gas emissions market, California can become a global leader in the design and implementation of regional carbon polices. Moreover, if more regions use the California market as their starting point, then linking these programs together will be more straightforward and the ultimate goal of an effective global climate policy the more likely end result.
Health risks from poor malaria control, unsafe water, and indoor air pollution are responsible for an important share of the global disease burden—and they can be addressed by efficacious household health technologies that have existed for decades. However, coverage rates of these products among populations at risk remain disappointingly low. We conducted a review of the medical and public health literatures and found that health considerations alone are rarely sufficient motivation for households to adopt and use these technologies.
Unconventional natural gas and the technologies developed to extract it in the U.S. point to a possible lower carbon energy future for China that can be facilitated through international cooperation between them, improving China's reliance on domestically produced coal, and creating economic and environmental benefits for both countries as well as the rest of the world.
Carbon in the classroom: Lessons from a simulation of California’s electricity market under a stringent cap and trade system
This paper summarizes the lessons learned from implementing a realistic, game-based simulation of California’s electricity market with a cap-and-trade market for greenhouse gas (GHG) emissions and fixed-price forward financial contracts for energy. Sophisticated market participants competed to maximize their returns under stressed (high carbon price) market conditions. Our simulation exhibited volatile carbon prices that could be influenced by strategic behavior of market participants.
We compare the cost of generating electricity with coal and wind in Chile’s Central Interconnected System (SIC). Our estimates include the cost of marginal damages caused by coal plant emissions.
To maximize environmental benefits from the rollout of its cap-and-trade program for greenhouse gas emissions, California should focus on achieving a positive demonstration effect from the program by doing as little as possible to harm the state's economy, as transparently as possible and as fast as possible.