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Internalizing externalities into capacity expansion planning: The case of electricity in Vietnam

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  • Nguyen, Khanh Q.

Abstract

This paper examines the impacts of including external costs such as environmental and health damages from power production on power generation expansion planning in Vietnam. Using the MARKAL model and covering a 20-year period to 2025, the study shows that there are substantial changes in the generation structure in favor of renewable energy technologies and other low emitting technologies. These changes lead to a reduction in fossil fuel requirements, and consequently, a reduction of CO2, NOx, SO2, and PM emissions which could be expected to also reduce the associated environmental and human health impacts. The avoided external costs would be equivalent to 4.4US cent/kWh. However, these gains are not free as the additional electricity production cost would be around 2.6US cent/kWh higher if the switch to more expensive, but lower emitting technologies were made. The net benefit of internalizing these externalities is thus around 1.8US cent/kWh.

Suggested Citation

  • Nguyen, Khanh Q., 2008. "Internalizing externalities into capacity expansion planning: The case of electricity in Vietnam," Energy, Elsevier, vol. 33(5), pages 740-746.
    • Handle: RePEc:eee:energy:v:33:y:2008:i:5:p:740-746
    DOI: 10.1016/j.energy.2008.01.014
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    1. Socrates Kypreos & Robert Krakowski, 2004. "Introducing externalities in the power-generation sector of China," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 22(2/3/4), pages 131-154.
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    3. Nguyen, Khanh Q., 2007. "Alternatives to grid extension for rural electrification: Decentralized renewable energy technologies in Vietnam," Energy Policy, Elsevier, vol. 35(4), pages 2579-2589, April.
    4. Sabine Messner, 1997. "Endogenized technological learning in an energy systems model," Journal of Evolutionary Economics, Springer, vol. 7(3), pages 291-313.
    5. Rafaj, Peter & Kypreos, Socrates, 2007. "Internalisation of external cost in the power generation sector: Analysis with Global Multi-regional MARKAL model," Energy Policy, Elsevier, vol. 35(2), pages 828-843, February.
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