Energy Market Dynamics Research Articles

Climate change and the legitimacy of Bitcoin

This paper examines the ways in which Bitcoin miners are responding to external pressures associated with climate change and what this means for the legitimacy of Bitcoin. Using the experiences of four miners with very different energy use practices, the paper unpacks the various motivations and choices that underpin Bitcoin mining, including factors that can be obscured in economic and data models. Miners make decisions based on cost, local partnerships, the preferences of capital investors, energy market dynamics, technology upgrades, and the regulatory environment. In responding to these pressures and events, some miners are providing services and innovations that may help the viability of clean energy infrastructures for energy providers and beyond, including the data and computing industry. The paper finds that if Bitcoin loses legitimacy as a store of value, then it may result in lost opportunities to accelerate sustainable energy infrastructures and markets.

The former mining area of Santa Barbara in Tuscany and a spatial strategy for its regeneration

The former brown coal mining site of Santa Barbara (1,600 ha) is located in the Valdarno area of Tuscany, Italy. It is owned by Enel, the main Italian energy company, formerly State-run and progressively privatized since 1992. As mining activities drew to a close, Enel began developing an Environmental Rehabilitation Plan (“Piano di Recupero Ambientale”) for the site in 1993, as required by law. To date, that plan has not yet been implemented. In the meantime, the Santa Barbara site has been reconquered by ‘nature’. Within the framework of the Enel's Futur-e project, the Politecnico di Milano in collaboration with the Università degli Studi di Firenze have designed a spatial strategy for the redevelopment of Santa Barbara, capable to interact with the Environmental Rehabilitation Plan.This paper describes the history and particular landscape of the site and, from the inside, the complex process undertaken to design the spatial strategy and the Master Plan for the area. Based upon the cultural heritage of cycling in Tuscany, the “Santa Barbara Cycling Hub & Park” Master Plan is the first milestone on the path to a sustainable landscape and heritage-based development, in a continuously changing scenario driven by shifting energy market dynamics and Enel's business strategy.

Global energy market dynamics and natural gas development in the Eastern Mediterranean region

This article discusses the development of Eastern Mediterranean natural gas resources in the context of global energy market dynamics. The focal point of this research is to apply Localization Theory through systematic attention on the mutual interaction between geographical proximity, regional relations, energy geopolitics, and economics to investigate the trade of natural gas. Eastern Mediterranean is a geopolitically important region endowed with natural gas resources. The realization of potential development options and achievements of desired results have been stranded by changing regional and global energy market and geopolitical dynamics, different policy approaches, and existing conflicts. In the current energy context, the global energy market structure is altering with the development of unconventional resources, falling demand, abundance in supply, changing pricing structure, and declining global energy infrastructure investments. The study revealed that decisions about the development of natural resources and export infrastructure are dependent on global energy market dynamics in conjunction with regional geopolitics. Regional cooperation and development of energy policies in line with the careful consideration of global energy market dynamics and energy geopolitics are suggested as the main path to shape the future of these processes. The study also revealed that development and monetization of the Eastern Mediterranean natural gas resources necessitate a pragmatic approach based on realistic expectations and the development of all-inclusive cooperative schemes. Joint development of regional natural gas resources under these cooperative schemes is likely to produce desired solutions for the energy development and monetization process and create economies of scale by keeping costs low.

China’s Natural Gas Demand Projections and Supply Capacity Analysis in 2030

This paper builds an econometric model to analyze the income elasticity and price elasticities of sectoral natural gas demand and forecasts China’s natural gas demand up to 2030. The findings indicate that there is a long-term equilibrium relationship among sectoral natural gas demand, sectoral income and various fuel prices. The results also indicate that most price elasticities are smaller relative to developed countries; the effect of fuel prices on natural gas demand is partly offset by the government regulation. In the Business As Usual (BAU) scenario, China’s natural gas demand will reach 340 bcm and 528 bcm and its foreign dependence will reach 27.9% and 43.2% in 2020 and 2030, respectively. The forecast and discussion in this paper provide important insights into China’s energy policy design and pricing mechanism reform, and into the potential impact of China’s growing natural gas demand on global energy market dynamics.

Economics of Pooling Small Local Electricity Prosumers—Prosumer vs Business as Usual Approach

This paper analyses the economics of pooling small UK based local electricity prosumers with back-up access to the National Grid and compares it to the current conventional UK electricity supply model—business as usual (BAU) approach. This is contextualized against the UK energy market framework, prosumer research and changing energy market dynamics. For the economic assessment a three-tiered production/supply and consumption model is developed based on site specific levelized cost of electricity (LCOE) and other cost parameter to operate the model. Modeling results indicated the economic feasibility and advantage of a prosumer approach in a significant number of modeling scenarios. Additionally, a break-even analysis for the two approaches was undertaken to understand the sensitivity of individual input parameters.

Financial Time Series Modelling of Trends and Patterns in the Energy Markets

Precise recognition of a time series path is important to policy makers, statisticians, economists, traders, hedgers and speculators alike. The correct time series path is also a key ingredient in pricing models. This study uses daily futures prices of crude oil and other distillate fuels. This paper considers the statistical properties of energy futures and spot prices and investigates the trends that underlie the price dynamics in order to gain further insights into possible nuances of price discovery and energy market dynamics. The family of ARMA-GARCH models was explored. The trends depict time varying variability and persistence of oil price shocks. The return series conform to a constant mean model with GARCH variance.

Boosting new renewable technologies towards grid parity – Economic and policy aspects

The intensity of market penetration and hence the relevance of clean energy technologies in mitigating climate change will greatly depend on their cost-effectiveness. This paper discusses the economic and policy aspects of speeding up the market of these technologies to reach cost parity. A combination of historical energy market dynamics, technology diffusion and endogenous learning models were employed in the analyses. Starting from giving a preferential position to emerging renewable energy technologies in the energy and climate policy, which also means securing adequate financial resources for their deployment, could lead in the base scenario to a full-cost breakthrough of wind power around 2027 and of photovoltaics in 2032. The combined global market share of renewable electricity in 2050 could reach 62% of all electricity (now 19%) of which wind and solar power alone could account for almost two-thirds corresponding to a carbon saving in the range of 8–16 GtCO 2. However, if the new technologies were downgraded in the energy and climate policy context, the combined impact of solar and wind could remain at no less than 11% which would marginalize these technologies in the fight against climate change. The estimates for financial support to achieve cost parity were very sensitive to the assumptions of the input parameters: in the base case the extra costs or learning investments for solar power were €1432 billion and for wind power €327 billion, but with more conservative input data these values could grow manifold. On the other hand, considering the potentially cheaper electricity from new technologies above the cost parity point and putting a price on carbon could result in a positive yield from public support instead of it being regarded merely as unnecessary spending. The findings stress the necessity of long-term policies and strong commercialization strategies to bring the new energy technologies to breakeven point, but also highlight the complexity of assessing the true costs of making new energy technologies fully competitive.

Modeling energy market dynamics using discrete event system simulation

Abstract This paper proposes the use of Discrete Event System Simulation to study the interactions among fuel and electricity markets and consumers, and the decision-making processes of fuel companies (FUELCOs), generation companies (GENCOs), and consumers in a simple artificial energy market. In reality, since markets can reach a stable equilibrium or fail, it is important to observe how they behave in a dynamic framework. We consider a Nash–Cournot model in which marketers are depicted as Nash–Cournot players that determine supply to meet end-use consumption. Detailed engineering considerations such as transportation network flows are omitted, because the focus is upon the selection and use of appropriate market models to provide answers to policy questions.

Co-benefits: experience and lessons from the US electric sector

Past experience in the US indicates that a focus on reducing individual types of pollutants can result in success for the targeted pollutants, yet allow continued growth in other pollutants, most notably CO2. The electric industry has demonstrated the capacity to make large investments in controlling emissions, as well as in developing new generation sources. In the absence of multi-pollutant regulations, investments in specific emissions controls may subsequently prove non-useful as new pollutants are regulated. The most effective approach to achieving co-benefits is to anticipate future regulatory constraints and invest in non-polluting technologies and energy efficiency. However, estimating the emissions avoided due to energy efficiency is not straightforward. In the United States, "displaced" emissions are spatially and temporally non-uniform due to the distribution of energy production and energy market dynamics. Emissions data exist to understand this variation and may be used to target programs. Analysis of program results reveals that energy efficiency programs exhibit economies of scale. The case of Southwest Connecticut provides an example of a co-benefits approach to addressing conflicting results of several policies. Efficiency programs have a high potential to reduce both carbon emissions as well as other pollutants. Significant consideration must be given to techniques to account for the emissions benefits of these programs.

A Profit-Based Approach for Gas Turbine Power Plant Outage Planning

Abstract Traditionally, for complicated systems, such as a gas turbine power plant, maintenance cost and online availability are two of the most important concerns to the equipment owner. However, in the deregulated electric power market, cost and reliability are not the only concerns. The ultimate goal is to maximize plant profitability, and this requires the evaluation of many different factors, including system performance, the aging and reliability of equipment, maintenance practices, and market dynamics accounting for the price and availability of fuel as well as the generation of revenues in competing markets. Thus, gas turbine power plant planning optimization is a complex problem, and comprehensive operational modeling and optimization methods are required. In this paper, a profit-based power plant outage planning approach is presented that reflects the new challenges posed by deregulation. Specifically, particular attention is paid to modeling power plant aging, performance degradation, reliability deterioration, and, importantly, the energy market dynamics. A multiple time-scale method is developed for coupled short-term, long-term generation scheduling and outage planning for this profit-based outage planning approach. The procedure is implemented for a base load combined cycle power plant with a single gas turbine, with the results demonstrating the feasibility of the proposed approach.

Examples of successful architectural integration of PV: Australia

AbstractAn abundance of solar energy resources in Australia and the application of remote area power systems (RAPS) are well known. Numerous locations, isolated from the electricity grid have benefited from photovoltaic energy supply with economic justification and provided a platform from which the scientific knowledge and expertise has grown over 30 years. Of current global relevance is the transition and growth of photovoltaic applications in the urban environment through building‐integrated PV (BiPV) and its use as a clever building material. Energy market dynamics in Australia and low‐priced fossil fuels limit the present market potential for BiPV. Showcase projects and government programmes have provided the much needed impetus to develop and introduce BiPV products to the building industry and, importantly, experiment with architectural design solutions that strive to offer added benefits to the built environment. This paper discusses examples of successful integration of PV and lessons learnt in the process. The importance of high ambient temperature conditions, thermal performance and smart electrical configurations to minimise shading influences, are considered to be particularly relevant. Copyright © 2004 John Wiley & Sons, Ltd.