IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v117y2023ics0140988322005412.html
   My bibliography  Save this article

Wind, water and wires: Evaluating joint wind and interconnector capacity expansions in hydro-rich regions

Author

Listed:
  • Newbery, David

Abstract

Countries or regions with a high share of storage hydro and good renewables resources may be able to interconnect to less well-endowed neighbours. To maximise joint benefits, coordinating interconnector and renewables investment is desirable. Suitable long-term contracts ensure that beneficiaries pay and jointly cover the highly dispersed costs and benefits. The article develops a simple model calibrated for Tasmania that demonstrates how this can be quantified and various counterfactuals tested. The key to the simplification is that the value of water is both stable over time and the key driver of outcomes. The economic attraction of proposed wind and interconnector investment depends sensitively on the value placed on CO2 reductions.

Suggested Citation

  • Newbery, David, 2023. "Wind, water and wires: Evaluating joint wind and interconnector capacity expansions in hydro-rich regions," Energy Economics, Elsevier, vol. 117(C).
    • Handle: RePEc:eee:eneeco:v:117:y:2023:i:c:s0140988322005412
    DOI: 10.1016/j.eneco.2022.106412
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988322005412
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2022.106412?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gert Brunekreeft & David Newbery, 2006. "Should merchant transmission investment be subject to a must-offer provision?," Journal of Regulatory Economics, Springer, vol. 30(3), pages 233-260, November.
    2. Brunekreeft, Gert & Neuhoff, Karsten & Newbery, David, 2005. "Electricity transmission: An overview of the current debate," Utilities Policy, Elsevier, vol. 13(2), pages 73-93, June.
    3. Huang, Kangdi & Liu, Pan & Ming, Bo & Kim, Jong-Suk & Gong, Yu, 2021. "Economic operation of a wind-solar-hydro complementary system considering risks of output shortage, power curtailment and spilled water," Applied Energy, Elsevier, vol. 290(C).
    4. Stefan Lamp & Mario Samano, 2023. "(Mis)allocation of Renewable Energy Sources," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(1), pages 195-229.
    5. Bell, William Paul & Wild, Phillip & Foster, John & Hewson, Michael, 2015. "Wind speed and electricity demand correlation analysis in the Australian National Electricity Market: Determining wind turbine generators’ ability to meet electricity demand without energy storage," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 182-191.
    6. Gupta, Akshita & Kumar, Arun & Khatod, Dheeraj Kumar, 2019. "Optimized scheduling of hydropower with increase in solar and wind installations," Energy, Elsevier, vol. 183(C), pages 716-732.
    7. Spiecker, Stephan & Vogel, Philip & Weber, Christoph, 2013. "Evaluating interconnector investments in the north European electricity system considering fluctuating wind power penetration," Energy Economics, Elsevier, vol. 37(C), pages 114-127.
    8. Bell, William Paul & Wild, Phillip & Foster, John & Hewson, Michael, 2017. "Revitalising the wind power induced merit order effect to reduce wholesale and retail electricity prices in Australia," Energy Economics, Elsevier, vol. 67(C), pages 224-241.
    9. Yang, Yuting, 2020. "Electricity Interconnection with Intermittent Renewables," TSE Working Papers 20-1075, Toulouse School of Economics (TSE).
    10. Newbery, David, 2018. "Shifting demand and supply over time and space to manage intermittent generation: The economics of electrical storage," Energy Policy, Elsevier, vol. 113(C), pages 711-720.
    11. Newbery, David, 2021. "National Energy and Climate Plans for the island of Ireland: wind curtailment, interconnectors and storage," Energy Policy, Elsevier, vol. 158(C).
    12. LaRiviere, Jacob & Lyu, Xueying, 2022. "Transmission constraints, intermittent renewables and welfare," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paul Simshauser, 2023. "The regulation of electricity transmission in Australia's national electricity market: user charges, investment and access," Working Papers EPRG2311, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Rangarajan, Arvind & Foley, Sean & Trück, Stefan, 2023. "Assessing the impact of battery storage on Australian electricity markets," Energy Economics, Elsevier, vol. 120(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Newbery, D., 2022. "Wind, water and wires: evaluating joint wind and interconnector capacity expansions in hydro-rich regions," Cambridge Working Papers in Economics 2212, Faculty of Economics, University of Cambridge.
    2. McDonald, Paul, 2024. "Interrelationships of renewable energy zones in Queensland: localised effects on capacity value and congestion," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 818-833.
    3. Muireann Á. Lynch & Richard Tol & Mark J. O’Malley, 2014. "Minimising costs and variability of electricity generation by means of optimal electricity interconnection utilisation," Working Paper Series 6814, Department of Economics, University of Sussex Business School.
    4. Simshauser, P., 2019. "On the impact of government-initiated CfD’s in Australia’s National Electricity Market," Cambridge Working Papers in Economics 1901, Faculty of Economics, University of Cambridge.
    5. William Paul Bell & John Foster, 2017. "Using solar PV feed-in tariff policy history to inform a sustainable flexible pricing regime to enhance the diffusion of energy storage and electric vehicles," Journal of Bioeconomics, Springer, vol. 19(1), pages 127-145, April.
    6. Mwampashi, Muthe Mathias & Nikitopoulos, Christina Sklibosios & Konstandatos, Otto & Rai, Alan, 2021. "Wind generation and the dynamics of electricity prices in Australia," Energy Economics, Elsevier, vol. 103(C).
    7. Simshauser, P. & Gilmore, J., 2020. "Is the NEM broken? Policy discontinuity and the 2017-2020 investment megacycle," Cambridge Working Papers in Economics 2048, Faculty of Economics, University of Cambridge.
    8. Simshauser, Paul, 2019. "Missing money, missing policy and Resource Adequacy in Australia's National Electricity Market," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.
    9. Bell, William Paul & Wild, Phillip & Foster, John & Hewson, Michael, 2017. "Revitalising the wind power induced merit order effect to reduce wholesale and retail electricity prices in Australia," Energy Economics, Elsevier, vol. 67(C), pages 224-241.
    10. Chyong, Chi Kong & Newbery, David, 2022. "A unit commitment and economic dispatch model of the GB electricity market – Formulation and application to hydro pumped storage," Energy Policy, Elsevier, vol. 170(C).
    11. Adrien de Hauteclocque & Vincent Rious, 2009. "Reconsidering the Regulation of Merchant Transmission Investment in the Light of the Third Energy Package: The Role of Dominant Generators," RSCAS Working Papers 2009/59, European University Institute.
    12. Juan Rosellón, 2009. "Mechanisms for the Optimal Expansion of Electricity Transmission Networks," Chapters, in: Joanne Evans & Lester C. Hunt (ed.), International Handbook on the Economics of Energy, chapter 24, Edward Elgar Publishing.
    13. Simshauser, Paul & Billimoria, Farhad & Rogers, Craig, 2022. "Optimising VRE capacity in Renewable Energy Zones," Energy Economics, Elsevier, vol. 113(C).
    14. Simshauser, Paul, 2020. "Merchant renewables and the valuation of peaking plant in energy-only markets," Energy Economics, Elsevier, vol. 91(C).
    15. Lynch, Muireann Á. & Tol, Richard S.J. & O'Malley, Mark J., 2012. "Optimal interconnection and renewable targets for north-west Europe," Energy Policy, Elsevier, vol. 51(C), pages 605-617.
    16. Simshauser, Paul, 2018. "Garbage can theory and Australia's National Electricity Market: Decarbonisation in a hostile policy environment," Energy Policy, Elsevier, vol. 120(C), pages 697-713.
    17. Rai, Alan & Nunn, Oliver, 2020. "On the impact of increasing penetration of variable renewables on electricity spot price extremes in Australia," Economic Analysis and Policy, Elsevier, vol. 67(C), pages 67-86.
    18. McDonald, Paul, 2023. "Locational and market value of Renewable Energy Zones in Queensland," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 198-213.
    19. Newbery, David M., 2023. "High renewable electricity penetration: Marginal curtailment and market failure under “subsidy-free” entry," Energy Economics, Elsevier, vol. 126(C).
    20. Qiu, Rui & Liao, Qi & Klemeš, Jiří Jaromír & Liang, Yongtu & Guo, Zhichao & Chen, Jinyu & Zhang, Haoran, 2022. "Roadmap to urban energy internet with wind electricity-natural gas nexus: Economic and environmental analysis," Energy, Elsevier, vol. 245(C).

    More about this item

    Keywords

    Hydro-storage; Wind; Interconnectors; Carbon benefits;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • F18 - International Economics - - Trade - - - Trade and Environment
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:117:y:2023:i:c:s0140988322005412. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.