| ID | 097527 |
| Title Proper | Valuing diversity in energy supply |
| Language | ENG |
| Author | Skea, Jim |
| Publication | 2010. |
| Summary / Abstract (Note) | here is renewed interest in the role of supply diversity in promoting energy security. This paper explores ways of valuing diversity. A possible incentive mechanism for promoting diversity which takes account of underlying "disparities" between different technology options is developed. The mechanism provides a way of trading off cost and diversity and results in an "efficient" cost-diversity frontier by analogy with financial portfolio theory. If all technologies are believed to be equally disparate, the appropriate mechanism is a "levy" imposed on market share. If the technologies are not equally disparate, the levy needs to be adjusted by technology-specific multipliers that take account of levels of disparity and patterns of market share. The analysis is applied to two stylised situations. In the long-run equilibrium case, the implications of both different patterns of disparity and different values attached to diversity are investigated. The paper also explores the implications of applying such a mechanism to the current Great Britain electricity system. The implications in terms of financial flows, for both the market as a whole and for individual operators, are investigated. Finally, the appropriateness of such a mechanism in the light of other policy goals, and possible future research directions, is discussed. |
| `In' analytical Note | Energy Policy Vol. 38, No. 7; Jul 2010: p3608-3621 |
| Journal Source | Energy Policy Vol. 38, No. 7; Jul 2010: p3608-3621 |
| Key Words | Security - Supply ; Diversity - Supply ; Electricity Generation |