On cost-effective technical measures to avoid environmental damages of regional energy systems

Abstract

SUMMARYThe production of heat and electricity can cause large environmental impacts and, hence, large costs for society. Those are costs that are seldom taken into consideration. An important question is how the future technical energy systems should be formed if environmental costs were considered as any other good or service, such as raw material, capital and labour. This study comprises cost-effective technical measures when monetary values of external effects are included in an energy system analysis. It is an analysis of how the present energy system can for society be cost-effectively reconstructed to be more sustainable. A regional energy system model has been developed to perform the study and it concentrates upon production of heat in single-family houses, multi-dwelling buildings, non-residential premises and district heating systems. The analysis adopts a business economic perspective, using present prices of energy carriers, and a more socio-economic perspective, in which external costs are included. The result of the analysis is the optimal mix of energy carriers as well as new and existing heating plants that minimizes the costs of satisfying a demand for heat. The results show that it is profitable to invest in new heating plants fuelled with woody biomass. Furthermore, the external costs arising with satisfying the demand for heat can decrease substantially, 60%, by carrying through with the investments that are cost-effective according to the institutional rules valid today. When monetary values of external costs are taken into consideration, this number is additional 5-percentage points lower. It is shown that if environmental costs are included it is more expensive to continue with business as usual than it is to reconstruct and run a more sustainable energy system.

Who invests in renewable electricity production? Empirical evidence and suggestions for further research

“…production based on nuclear energy or fossil fuels (e.g. Awerbuch, 2003;Bode and Michaelowa, 2003;Carlson, 2002;Huang and Wu, 2008;Kahn, 1996;Söderholm et al, 2007), whereas others compare different renewable energy technologies with each other (e.g. Delmas and Montes-Sancho, 2011;Finon and Perez, 2007;Fleten et al, 2007;Muñoz et al, 2009).…”

“…Awerbuch, 2006;Bhattacharya and Kojima, 2012). Finally, Awerbuch (2000Awerbuch ( , 2003 and Carlson (2002) argue that social costs are underestimated in economic assessments which compare RES-E and conventional electricity production. When social costs are considered together with other costs and with return on investments, RES-E appears to be more cost-effective than conventional electricity production.…”

“…A number of authors (e.g. Bode and Michaelowa, 2003;Carlson, 2002;Muñoz et al, 2009;Neuhoff et al, 2008;Pettersson and Söderholm, 2009;Söderholm et al, 2007;Söderholm and Pettersson, 2011) include policy measures such as carbon pricing, green certificates, energy taxes or bonuses for renewable energy sources. Second, investors might have other investment options than electricity production, and for these the LC approach is not relevant at all.…”

“…Although this is not always explicitly mentioned in the studies, it tends to become very clear from the assumptions made in the analysis (see Table 1, column D): RES-E investors either plan portfolios including different electricity production plants within a larger energy system (cf. Awerbuch, 2006;Bhattacharya and Kojima, 2012;Carlson, 2002) or invest in very large plants (cf. Faúndez, 2008;Muñoz et al, 2009;Söderholm et al, 2007); they can choose the best location for their plant (apparently without having to worry about getting access to that location) (cf.…”

Entering renewable electricity production : An actor perspective

“…Awerbuch 2003, Bode and Michaelowa 2003, Carlson 2002, Huang and Wu 2008, Kahn 1996, or between different types of renewable energy technologies (e.g. Finon and Perez 2007, Fleten et al 2007, Muñoz et al 2009, Delmas and Montes--Sancho 2011.…”