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ID: 113467

Determinants of energy efficiency investments in the US / Abadie, Luis M; Ortiz, Ramon A; Galarraga, I

Abadie, Luis M	Journal Article
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2012.

Summary/Abstract

This paper analyses decisions on energy efficiency (EE) investments by small and medium manufacturing enterprises in the US, which have received assessment from the Department of Energy (DoE). The results confirm the importance of payback time and investment costs as the main determining factors in deciding whether to invest in energy efficiency. Such investment recommendations are frequently not implemented even though they apparently entail major advantages and give rise to considerable energy savings. The data show results which are compatible with a series of elementary valuation processes (limited to availability of information), far removed from other, more academically ambitious methods such as Net Present Value (NPV) and the Real Options (RO) method. The paper analyses the impact of the primary resource streams (Electricity, Natural Gas, Other Energy, Waste and Others), physical situation of firms in line with their geographical locations in different US states, and changes over time from 1984 to 2009. EE investment decisions are analysed here using Probit models whose parameters are calibrated on the basis of the information held in the Industrial Assessment Centres (IAC) database. The results suggest various ideas to improve policies for promoting investment in EE, specially the IAC programme.

Key Words

Energy Efficiency ; Energy Policies ; Energy Assessments

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ID: 092753

Income risk of EU coal-fired power plants after Kyoto / Abadie, Luis M; Chamorro, José M

Abadie, Luis M	Journal Article
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Publication

2009.

Summary/Abstract

Coal-fired power plants enjoy a significant advantage relative to gas plants in terms of cheaper fuel cost. This advantage may erode (or turn into disadvantage) depending on CO2 emission allowance price. Financial risks are further reinforced when the price of electricity is determined by natural gas-fired plants' marginal costs. We aim to empirically assess the risks in EU coal plants' margins up to the year 2020. Parameter values are derived from actual market data. Monte Carlo simulation allows compute the expected value and risk profile of coal plants' earnings. Future allowance prices may spell significant risks on utilities' balance sheets.

Key Words

Kyoto Protocol ; Power Plant ; Clean Dark Spread ; Monte Carlo ; Coal Fired

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