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The cost of displacing fossil fuels: Some evidence from Texas

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  • Peter R. Hartley

    (Department of Economics and Center for Energy Studies, James A. Baker III Institute for Public Policy, Rice University and Business School, The University of Western Australia)

Abstract

Although technological progress can alter the relative costs of different energy sources, fossil fuels inevitably will be displaced as depletion raises their costs and makes them uncompetitive. They may be displaced sooner if they are taxed to internalize negative externalities. Currently, wind generation or nuclear power, supplemented by bulk electricity storage, are the most feasible alternatives to fossil fuels for electricity generation. The ERCOT ISO in Texas provides a realistic model for examining the costs of replacing fossil fuels by wind generation and storage, and for comparing wind power with generation based on nuclear and storage. ERCOT is relatively isolated from neighboring grids, and wind power was almost a quarter of its total generating capacity at the end of 2016. Using the ERCOT example, we also discuss how the long-run configuration of the electricity supply system affects evolution away from a system dominated by natural gas.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Peter R. Hartley, 2017. "The cost of displacing fossil fuels: Some evidence from Texas," Economics Discussion / Working Papers 17-07, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:17-07
    Note: MD5 = b1999a802d45d6a87fa65ce525a7b257
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    File URL: https://ecompapers.biz.uwa.edu.au/paper/PDF%20of%20Discussion%20Papers/2017/DP%2017.07_Hartley.pdf
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    References listed on IDEAS

    as
    1. Peter Hartley, Kenneth B. Medlock III, Ted Temzelides, Xinya Zhang, 2016. "Energy Sector Innovation and Growth: An Optimal Energy Crisis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
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    Cited by:

    1. Idel, Robert, 2022. "Levelized Full System Costs of Electricity," Energy, Elsevier, vol. 259(C).

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    More about this item

    Keywords

    Energy transition; wind; nuclear; natural gas; electricity storage;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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