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Rent Taxes on Norwegian Hydropower Generation

Eirik S. Amundsen, Christian Andersen, Jan Gaute Sannarnes

Year: 1992
Volume: Volume 13
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol13-No1-6
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Abstract:
In Norway, two obstacles to the introduction of a hydro rent tax are about to vanish, the old accounting system for public utilities and the system of administered non-rent prices. The tax authorities are now searching for a viable rent tax system. In this paper we consider detailed effects of six tax systems on realistically modelled marginal and highly profitable power plants. In addition to the existing "percentage system" we examine the ordinary corporate tax system, a special electricity income tax, a higher rate of proportional income tax, an excise tax and a resource rent tax. These systems are compared and evaluated with respect to neutrality, sensitivity to the amount of economic rent generated in a plant, cost-consciousness, stability of tax rates, stability of taxes paid, uncertainty of tax revenues and administrative costs. We conclude that the existing Norwegian tax system for electricity generation is not suited for taxing hydro rent since it seriously violates several of these criteria. The existing system ought to be replaced by a resource rent tax either as a pure system or in combination with a corporate income tax system.



The Power Equipment Industry in Transition

Augusto Ninni

Year: 1992
Volume: Volume 13
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol13-No3-6
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Abstract:
This paper deals with the expected effects of the EEC Commission decision to open up EEC public procurement markets within the Single Market initiative. These effects are viewed on the behavior of European utilities and on the power equipment supplying sector. Both price and non-price effects are analyzed. The new market configuration should require a new kind of supplier, able to add the advantages of being "domestic" to the advantages of being part of a large, transnational group. Thus, such an institutional initiative can explain a large part of the general turmoil which hit the international power equipment industry in the late 1980s. However, the increasing concentration of the supply sector-also stimulated in part by the success of gas turbine technology-reduces the expectation that EEC utilities will take advantage of the opening up of their procurement markets, at least in terms of lower equipmentprices.



Why Wind Is Not Coal: On the Economics of Electricity Generation

Lion Hirth, Falko Ueckerdt, and Ottmar Edenhofer

Year: 2016
Volume: Volume 37
Number: Number 3
DOI: 10.5547/01956574.37.3.lhir
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Abstract:
Electricity is a paradoxical economic good: it is highly homogeneous and heterogeneous at the same time. Electricity prices vary dramatically between moments in time, between location, and according to lead-time between contract and delivery. This three-dimensional heterogeneity has implication for the economic assessment of power generation technologies: different technologies, such as coal-fired plants and wind turbines, produce electricity that has, on average, a different economic value. Several tools that are used to evaluate generators in practice ignore these value differences, including "levelized electricity costs", "grid parity", and simple macroeconomic models. This paper provides a rigorous and general discussion of heterogeneity and its implications for the economic assessment of electricity generating technologies. It shows that these tools are biased, specifically, they tend to favor wind and solar power over dispatchable generators where these renewable generators have a high market share. A literature review shows that, at a wind market share of 30-40%, the value of a megawatt-hour of electricity from a wind turbine can be 20-50% lower than the value of one megawatt-hour as demanded by consumers. We introduce "System LCOE" as one way of comparing generation technologies economically.





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