Welfare effects of technology-based climate policies in liberalized electricity markets: seeing beyond total system cost

This paper is a contribution to assessing the Swiss energy transition, with an emphasis on the consequences of decommissioning the nuclear power plants for the electricity market and the whole economy. We expect that increased renewable generation and demand-side policies of the type already envisioned will not suffice to close the supply gap, so that Switzerland will have to rely on more imports of electricity, moving away from the export surpluses realised almost every year since 1910. As this reference scenario is contrary to desired energy security, a policy scenario is proposed in which net electricity trade is constrained to balance over the year and the supply gap is closed by relaxing the existing restrictions on gas-fired power plants. One constraint replaces another one, so that the impacts are not obvious. Furthermore, the prices of electricity and natural gas evolve quite differently through time and depend on climate and energy policy. We use a modelling framework coupling a detailed representation of electricity generation and an encompassing representation of the macro-economy to compare these scenarios in terms of both total system cost and welfare. Both indicators favour the reference scenario without gas-fired power plants in spite of its higher marginal costs for electricity. The welfare loss of the policy scenario is small, though, much smaller than the increase in total system cost. This shows that a coupled bottom-up top-down modelling framework assessing the welfare effect of policies can yield very different results from those of an energy system model assessing their impact on total system cost.

Coupled energy economic model framework for analyzing Swiss electricity markets in changing policy environments

Sophie Maire

Energy policy needs to rely on the proper understanding of the interactions between policy instruments, consumer preferences, investment behavior, market structure, electricity supply, and the wider policy environment. This asks for appropriate modeling tools, able to represent precisely electricity supply options, model all types of energy and climate policies, as well as the reactions of the rest of the economy. Chapter 2 describes the ELECTRA-CH framework, developed to analyze electricity markets in Switzerland. This framework is composed of two component models: (1) a dynamic electricity supply model, CROSSTEM-CH, and (2) a dynamic computable general equilibrium (CGE) model of the Swiss economy, GENESwIS. The two models are coupled through an iterative soft link. Electricity market liberalization is altering pricing mechanisms in wholesale electricity markets, and thus the links between generation costs and user prices. This will affect the effectiveness of climate and energy policies. Models used to simulate such policies must be responsive to pricing rules. Chapter 3 shows how this can be done with the ELECTRA-CH framework and simulates a tightening of climate and energy policies. In the coupling procedure, the link between wholesale electricity prices (top-down) and generation costs (bottom-up) depends precisely on regulatory market assumptions: In the regulated market, wholesale electricity prices are "cost-plus", while they depend on marginal generation costs in the liberalized market. We show that, in Switzerland, an electricity tax is significantly more effective in reducing electricity demand in the liberalized than in the regulated market. Technology restrictions are still widely used in energy policy. Concerns about security, climate, or jobs preservation induce political quasi-selections of electricity generation technologies. Instruments inherited from regulation, technology restrictions may have different impacts on the economy when markets are largely liberalized. In chapter 4, we analyze (1) a balanced-trade scenario in which Switzerlandâs annual electricity production must be equal to its consumption; and (2) a no-gas scenario that forbids gas-fired power plants, but accepts net electricity imports. For Switzerland, the prohibition of gas-fired power plants and relaxation of trade constraints lower average cost while increasing marginal cost. With marginal cost pricing in liberalized markets, this increases profits. Reduction in total system cost and increase in electricity price affect welfare in opposite ways. A pure bottom-up analysis would overestimate the benefits of technology restrictions. Our frameworkâs strength lies in the capacity of exploring interactions in a complex economic system, rather than in strict policy recommendations. Therefore, in this thesis, the emphasis is put on the understanding of mechanisms. At the end of this research, it has been shown that energy modelers must communicate and temper their results carefully. While much has been said about the impact of assumptions on substitution elasticities and exogenous costs projections on modeling results, this research adds to the awareness on the effects of market liberalization assumptions and choice of modeling framework on policy assessment.

EPFL2016

Assessment of Solar Thermal Power Technologies

James Spelling

In the present climate of growing awareness about the dangers of global climate change, the development of new renewable energy technologies is primordial in the efforts to reduce emissions of carbon dioxide and other greenhouse gases. Rapid increases in the price of oil and worries about the stability and security of the extraction of fossil fuels have lead to renewed interest in the development of local energy sources, thereby reducing dependence on foreign fuel sources. Amid the plethora of option available, one of the more promising solutions is the increased use of solar power. Two main contrasting technologies exist for the conversion of the Sun’s energy into useful work, namely photovoltaic cells and solar thermal systems. The development of photovoltaic power has shown massive growth in recent years despite high costs, due mainly to the modular nature of the cells which allow their installation by private citizens, coupled with a number of government incentives. Development of solar thermal power generation has however been reasonably limited until recently, with the only continually operated commercial plants being the Luz SEGS I-IX plants at Kramer Junction in the United Sates. Solar thermal power generation shows great potential for supplying the base electricity needs of numerous countries in the sun-belt regions, stretching from the tropics to the Mediterranean. This has lead to a recent renewal in the development of such systems, notably with the construction of the PS10 central receiver plant in Spain. The Spanish government plans to bring the total solar generation capacity to a total of 300 MW by 2013. In other countries around the world, interest is growing in solar thermal power, with increased government and private spending fuelling research and innovation. Most solar thermal conversion technologies are still at the experimental stage, and no single technology has yet to impose its dominance. Different countries and research groups hold different solutions dear, but if solar thermal power is to become a fully mature electricity generating technology, the best of these diverse solutions must be combined in order to achieve optimal performance of the power plants.

2008

Redox dual-flow battery for combined electricity storage and hydrogen production

Danick Reynard

The energy transition towards a carbon-neutral and sustainable economy is one of the greatest challenges of the 21st century to combat global warming and pollution. The decarbonization process is affecting every sector of the economy (electricity, transportation, industrialâŠ). For power generation, renewable energy resources are realistic alternatives to replace fossil resources such as gas and coal. However, the intermittent nature of wind and solar power limits their penetration into the conventional grid and increases the need for energy storage (battery, hydrogen storageâŠ) for smoothing out fluctuations between electric supply and demand. In this context, the concept of the redox dual-flow battery was introduced to propose a hybrid storage solution that can store electrical energy both electrochemically and in the form of hydrogen fuel. The system differs from a traditional redox flow battery by including a secondary energy platform, in which the electrolytes can be discharged chemically in external catalytic reactors through redox-mediated water electrolysis to produce clean hydrogen. The dual storage feature improves the flexibility and enhances significantly the capacity of the system by storing energy beyond the capacity of the electrolytes in the form of hydrogen. Additionally, the redox-mediated water electrolysis offers several advantages over conventional electrolysis in terms of safety, durability and purity. In this thesis, the proof-of-concept of a dual-flow circuit using a vanadium-manganese redox flow battery for combined electricity storage and hydrogen production is demonstrated. The redox flow battery employs vanadium sulfate (V3+/V2+) and manganese sulfate (Mn3+/Mn2+) dissolved in concentrated sulfuric aqueous solution as negative and positive electrolyte, respectively. The galvanic cell achieves energy efficiency of 68% at a current density of 50 mAÂ·cmâ2 (cell voltage =1.92 V) and a relative battery energy density 45% higher than the conventional all-vanadium RFB in the same conditions. Once charged, the electrolytes can be spontaneously discharged through redox-mediated oxygen evolution reaction (OER) and hydrogen evolution reaction (HER) in RuO2 and Mo2C catalytic reactors, resulting in an energy consumption for hydrogen production of ca. 50 kWh/kg H2. The system provides a competitive alternative for large-scale energy storage in renewable energy and transport applications.

EPFL2022