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ID: 121370

Cost-benefit analysis of generating electricity from biomass / O'Mahoney, Amy; Thorne, Fiona; Denny, Eleanor

Denny, Eleanor	Journal Article
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Publication

2013.

Summary/Abstract

A key challenge internationally is the design of future electricity systems which will bring about emissions savings and fuel security at least cost. Peat is used to generate electricity in several EU countries, mainly to take advantage of indigenous resources and increase fuel mix diversity. The Irish government has introduced a target of 30% cofiring of peat and biomass by 2015. This paper assesses the feasibility of achieving this target by calculating the available indigenous biomass resource capable of being cofired; the cost of meeting the target; the benefits in terms of carbon abatement; and finally the present value in economic terms of meeting the target. Results demonstrate that Ireland has only half the necessary resource to meet the 30% target and that the net cost of doing so is greater than the cost of what is currently being paid for peat, in all of the scenarios considered. Thus, it is concluded that while it may be technically possible to meet the target by combining national resources with imported biomass this is never the least cost option, and as a result the targeted focus of Government policy may need to be reconsidered.

Key Words

Cost benefit analysis ; Renewable Generation ; Cofiring

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ID: 126543

Electricity prices and generator behaviour in gross pool electr / O'Mahoney, Amy; Denny, Eleanor

Denny, Eleanor	Journal Article
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Publication

2013.

Summary/Abstract

Electricity market liberalisation has become common practice internationally. The justification for this process has been to enhance competition in a market traditionally characterised by statutory monopolies in an attempt to reduce costs to end-users. This paper endeavours to see whether a pool market achieves this goal of increasing competition and reducing electricity prices. Here the electricity market is set up as a sealed bid second price auction. Theory predicts that such markets should result with firms bidding their marginal cost, thereby resulting in an efficient outcome and lower costs to consumers. The Irish electricity system with a gross pool market experiences among the highest electricity prices in Europe. Thus, we analyse the Irish pool system econometrically in order to test if the high electricity prices seen there are due to participants bidding outside of market rules or out of line with theory. Overall we do not find any evidence that the interaction between generator and the pool in the Irish electricity market is not efficient. Thus, the pool element of the market structure does not explain the high electricity prices experienced in Ireland.

Key Words

Electricity Markets ; Auction Theory ; Multiple Regression Analysis

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