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On May 28 and 29, PESD Director Frank Wolak and Graduate Student Nils Angliviel de La Beaumelle conducted a workshop at the Commission de régulation de l’énergie in Paris, France.

The goal of the workshop was to give participants hands-on experience with the principles underlying wholesale electricity market operation with a focus on concepts that are relevant to achieving long-term resource adequacy in a market with high shares of intermittent renewable energy. Participants learned about the following using PESD's Energy Market Game: (1) the exercise of unilateral market power by gencos in regions with and without transmission constraints, (2) incentives for genco offer behavior under uniform-price versus pay-as-bid auctions, (3) how fixed-price forward contracts for energy change the incentives of generation unit owners to exercise unilateral market power in the short-term market, (4) the impact of intermittent renewable energy on supplier behavior and market outcomes, (5) the long-term resource adequacy challenges created by high shares of intermittent renewable energy in wholesale market, and (5) the relative effectiveness of different approaches to ensuring long-term resource adequacy and reasonable short-term prices in a wholesale electricity market with and without a genco that has a large market share.

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We estimate the relationship between distributed generation investments and hourly net injections to the distribution grid across over 2,000 substations in France between 2005 and 2018. A 1 MW increase in solar PV capacity has no statistically significant impact on the highest percentiles of the annual distribution of hourly net of injections to the distribution grid. A 1 MW increase in wind capacity is predicted to reduce the 99th percentile of the annual distribution of hourly net injections to the distribution grid by 0.037 MWh. In contrast, a 1 MW investment in a distributed small hydro, non-renewable thermal, or renewable thermal generation unit predicts an almost five times larger MWh reduction in the 99th percentile of the annual distribution of hourly net injections to the distribution grid. A 1 MW investment in distributed solar PV or wind capacity predicts substantial absolute changes in both extremes of the annual distribution of hourly ramp rates of net injections to the distribution grid. For the remaining three distributed generation technologies, a 1 MW capacity increase does not predict a non-zero change in any percentile of the annual distribution of hourly ramp rates of net injections to the distribution grid. These results argue that, at least for the case of France, increases in distributed solar and wind capacity are more likely to lead to increases, rather than decreases, in distribution network investments.

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Nicolas Astier
Ram Rajagopal
Frank Wolak
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During a visit to Toulouse, France to present at “The Economics of Energy Markets” conference at the Toulouse School of Economics, PESD Director Frank Wolak was interviewed by Professor Jean-Michel Glachant of the Florence School Regulation about his work monitoring wholesale electricity markets.

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Associate Professor Jae-Seung Lee from Korea University, Division of International Studies will be leading the seminar on energy security and cooperation in Northeast Asia (including East Asia).

Professor Lee holds a B.A. in political science from Seoul National University (1991) and an M.A (1993) and PhD (1998) in political science from Yale University. He also earned a certificate from the Institut D'Etudes Politiques de Paris in France in 1995.

Before joining the faculty of Korea University, he had served as a professor at the Institute of Foreign Affairs and National Security (IFANS), the Ministry of Foreign Affairs and Trade. As a scholar in international political economy, he authored a number of books and articles on Korea, East Asia, and Europe. His current research includes energy security and energy diplomacy of Korea, among others. Prof. Lee has directed the Korea Energy Forum (KEF), an interdisciplinary energy research initiative, and conducted a number of energy projects with UNESCAP and the Ministry of Foreign Affairs and Trade. He has taught at Yale University, Seoul National University, and Korea University.

Stanford University

Jae-Seung Lee Associate Professor Speaker Korea University, Division of International Studies
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PESD senior fellow and Nobel laureate in Physics, Burton Richter, explains why an inclusive internationalization policy of both ends of the nuclear fuel-cycle can provide much needed carbon-free energy while limiting the potential for the proliferation of nuclear weapons. He insists that the nuclear proliferation problem can be remedied by a tightly monitored program through international policy and diplomacy where incentives to tame proliferation are increased, inspections are more rigorous, and a sanctions program is agreed upon and adhered to.

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Issues in Science and Technology
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Burton Richter
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Nuclear energy is undergoing a renaissance driven by two very loosely coupled needs; the first for much more energy to support economic growth worldwide, and the second to mitigate global warming driven by the emission of greenhouse gases from fossil fuel. A new generation of power reactors has been developed that are safer, easier to operate, and purported to have lower capital costs. This, coupled with rising costs of fossil fuels and concerns about environmental pollution from fossil fuel power plants, has lead to an increase in orders for new plants, mainly from Asia, but beginning to impact North America and Europe as well.

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Program on Energy and Sustainable Development Working Paper #58
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Burton Richter
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David G. Victor
David G. Victor
C. Ford Runge
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Having backed down from its trade dispute with the EU over GM food, the Bush administration will find it hard to make the threat of going to the trade organization credible again and to continue the momentum toward removing Europe's ban.

STANFORD, California - The Bush administration wisely backed away this month from formally challenging Europe's ban on genetically modified foods. It made no sense to antagonize Europeans over the food they eat when they are pivotal to more weighty matters, such as a new resolution on Iraq.

Still, Washington's threat that it would file a case against the European Union at the World Trade Organization had palpable benefits. Even the countries with the most hostile policies on engineered food - France and Germany among them - took steps toward allowing the European Union to work on replacing the blanket ban with a new system for tracing and labeling engineered food.

But the decision to back off also means that American farmers are still denied access to the lucrative European market. European consumers still pay more for food than they should. And developing countries that could most benefit from engineered crops are still frightened that losing their "engineering-free" status will make it impossible to export food to Europe.

Yet the science on food safety is as certain as it ever gets: There is no known danger from eating engineered food.

Having backed down, the Bush administration will find it hard to make the threat of going to the trade organization credible again and to continue the momentum toward removing Europe's ban. But even harder for the administration will be keeping domestic politics at bay.

The biggest threat to the success of the U.S. strategy on engineered foods is in the American heartland, which is angling for a fight with Europe over the ban as the 2004 elections approach. Senator Charles Grassley of Iowa called the decision to defer a trade dispute "the usual snobbery" of a State Department "more concerned about international sensitivities than the American farmer." Two tactics should guide the effort to open Europe's markets. One is to let the Europeans lead their own reform.

The engineered foods available to consumers today mainly benefit farmers who can grow them at lower cost. These foods look and taste the same as their traditional counterparts. For rich consumers in Europe willing to pay a bit more, it is easy to focus on hypothetical risks and shun these products. But the next generation of engineered foods, already nearing the marketplace, will have healthful benefits for consumers - fruits that contain cancer-fighting lycopene, for instance - and this will make it harder for European countries to bar all these foods.

During the furor last summer over Zambia's rejection of genetically modified corn, prominent European politicians were forced to declare that these foods were safe - a blatant contradiction of Europe's own policies.

The other tactic is outreach to the developing world. In the poorest nations, agriculture provides the livelihood of most of the population, and agricultural research proves that genetic engineering can make crops that poor farmers grow both healthier and more productive.

Yet research on engineered crops and support for farmers who grow them lack money, not only in U.S. agricultural development and extension programs but also at the international agricultural research centers that were the engine of the first green revolution. In the last decade American support for international agricultural research has declined considerably.

An American program that would finance agricultural research on novel uses for genetically modified crops in developing countries would help those countries and could eventually help open European markets.

An American-led effort to pry open those markets would backfire. But one led by a developing country could succeed, as Europe considers the moral issues posed by barring food from a country which needs to sell its crops to survive. So far, few developing countries (South Africa is one exception) allow commercial planting of engineered crops. The United States needs to overcome the fears of the developing nations by growing such crops there and demonstrating how they could transform agriculture.

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