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An Analysis of Department of Energy Residential Appliance Efficiency Standards

Raymond S. Hartman & MIT Energy Laboratory

Year: 1981
Volume: Volume 2
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol2-No3-5
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Abstract:
Over the past several years, the Department of Energy (DOE) and its predecessor agencies have initiated an array of policies aimed at limiting domestic consumption of fossil fuels. Several policy initiatives, aimed at residential fossil-based energy conservation, have included residential appliance efficiency standards, the commercialization of residential applications of solar photovoltaic (PV) installations and solar thermal appliances, and the implementation of energy performance standards for buildings. Each of these programs alone will reduce residential fossil fuel consumption. However, it remains unclear how they interact. In this article I examine how two programs may interact. In particular, I assess how well appliance efficiency standards will reduce fuel consumption and whether a standards program will conflict with or complement the DOE's PV commercialization efforts.



Demand Subsidies Versus R&D: Comparing the Uncertain Impacts of Policy on a Pre-commercial Low-carbon Energy Technology

Gregory F. Nemet and Erin Baker

Year: 2009
Volume: Volume 30
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol30-No4-2
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Abstract:
We combine an expert elicitation and a bottom-up manufacturing cost model to compare the effects of R&D and demand subsidies. We model their effects on the future costs of a low-carbon energy technology that is not currently commercially available, purely organic photovoltaics (PV). We find that: (1) successful R&D enables PV to achieve a cost target of 4c/kWh, (2) the cost of PV does not reach the target when only subsidies, and not R&D, are implemented, and (3) production-related effects on technological advance�learning-by-doing and economies of scale�are not as critical to the long-term potential for cost reduction in organic PV than is the investment in and success of R&D. These results are insensitive to two levels of policy intensity, the level of a carbon price, the availability of storage technology, and uncertainty in the main parameters used in the model. However, a case can still be made for subsidies: comparisons of stochastic dominance show that subsidies provide a hedge against failure in the R&D program.



Renewable Generation Capacity and Wholesale Electricity Price Variance

Erik Paul Johnson and Matthew E. Oliver

Year: 2019
Volume: Volume 40
Number: Number 5
DOI: 10.5547/01956574.40.5.ejoh
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Abstract:
The share of electric power generated from renewable energy sources such as wind and solar must increase dramatically in the coming decades if greenhouse gas emissions are to be reduced to sustainable levels. An under-researched implication of such a transition in competitive wholesale electricity markets is that greater wind and solar generation capacity directly affects wholesale price variability. In theory, two counter-vailing forces should be at work. First, greater wind and solar generation capacity should reduce short-run variance in the wholesale electricity price due to a stochastic merit-order effect. However, increasing the generation capacity of these technologies may increase price variance due to an intermittency effect. Using an instrumental variables identification strategy to control for endogeneity, we find evidence that greater combined wind and solar generation capacity is associated with an increase in the quarterly variance of wholesale electricity prices. That is, the intermittency effect dominates the stochastic merit-order effect.



A Compound Real Option Approach for Determining the Optimal Investment Path for RPV-Storage Systems

Benjamin Hassi, Tomas Reyes, and Enzo Sauma

Year: 2022
Volume: Volume 43
Number: Number 3
DOI: 10.5547/01956574.43.3.bhas
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Abstract:
The use of residential Photovoltaic-Storage systems may produce large benefits to owners and has expanded rapidly in recent years. Nonetheless, large uncertainties regarding the profitability of these systems make it necessary to incorporate flexibilities in their economic evaluations. This paper offers a new method to evaluate the compound flexibility of both the option of delaying investments and the option of further expanding the capacity of solar photovoltaic modules and batteries during the investment horizon. Flexibility is modeled as a compound real option, whose value is computed using a novel method that we call Compound Least Squares Monte Carlo (CLSM). The model is applied to the investment decisions associated to a residential Photovoltaic-Storage system. Results suggest that investors should use the proposed CLSM method in the economic valuation of multi-stage projects, since considering only a single flexibility could promote sub-optimal decisions. Moreover, in our case study, we show that it is optimal to break the investment down into two steps or more in 36% of future scenarios, on average.





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