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ID:
125729
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| Publication |
2013.
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| Summary/Abstract |
In 2001, Australia introduced legislation requiring investment in new renewable electricity generating capacity. The legislation was significantly expanded in 2009 to give effect to a 20% Renewable Energy Target (RET). Importantly, the policy was introduced with bipartisan support and is consistent with global policy trends. In this article, we examine the history of the policy and establish that the 'stop/start' nature of renewable policy development has resulted in investors withholding new capital until greater certainty is provided. We utilise the methodology from Simshauser and Nelson (2012) to examine whether capital market efficiency losses would occur under certain policy scenarios. The results show that electricity costs would increase by between $51 million and $119 million if the large-scale RET is abandoned even after accounting for avoided renewable costs. Our conclusions are clear: we find that policymakers should be guided by a high level public policy principle in relation to large-scale renewable energy policy: constant review is not reform.
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| 2 |
ID:
112271
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| Publication |
2012.
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| Summary/Abstract |
Decarbonizing electricity production is central to reducing greenhouse gas emissions. Exploiting intermittent renewable energy resources demands power system planning models with high temporal and spatial resolution. We use a mixed-integer linear programming model - SWITCH - to analyze least-cost generation, storage, and transmission capacity expansion for western North America under various policy and cost scenarios. Current renewable portfolio standards are shown to be insufficient to meet emission reduction targets by 2030 without new policy. With stronger carbon policy consistent with a 450 ppm climate stabilization scenario, power sector emissions can be reduced to 54% of 1990 levels by 2030 using different portfolios of existing generation technologies. Under a range of resource cost scenarios, most coal power plants would be replaced by solar, wind, gas, and/or nuclear generation, with intermittent renewable sources providing at least 17% and as much as 29% of total power by 2030. The carbon price to induce these deep carbon emission reductions is high, but, assuming carbon price revenues are reinvested in the power sector, the cost of power is found to increase by at most 20% relative to business-as-usual projections.
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| 3 |
ID:
117329
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| Publication |
2013.
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| Summary/Abstract |
Deregulated energy markets were founded on the Merchant Power Producer, a stand-alone generator that sold its production to the spot and short-term forward markets, underpinned by long-dated project finance. The initial enthusiasm that existed for investment in existing and new merchant power plant capacity shortly after power system deregulation has progressively dissipated, following an excess entry result. In this article, we demonstrate why this has become a global trend. Using debt-sizing parameters typically used by project banks, we model a benchmark plant, then re-simulate its performance using live energy market price data and find that such financings are no longer feasible in the absence of long-term Power Purchase Agreements.
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