Luke Reedman

Using a Real-Options Approach to Model Technology Adoption Under Carbon Price Uncertainty: An Application to the Australian Electricity Generation Sector

The present climate for investment in electricity generation assets in Australia is uncertain. We develop a real-options model to contrast the timing of the uptake of various electricity generation technologies under two carbon tax simulations: when a carbon tax of known size commences at a certain date in the future; and a carbon tax of known size commences at an uncertain date in the future. We find that uptake in the future varies significantly depending upon an investors view of uncertainty and whether the technology is primarily designed to be viable in a market with or without carbon taxes.

Modeling the deployment of plug-in hybrid and electric vehicles and their effects on the Australian National Electricity Market

The development of hybrid and fully electric vehicles could deliver significant reductions of emissions from the Australian transportation sector by shifting its major energy source from internal combustion to electricity. This shift towards the the use of electricity shifts the point source emissions to one which has a lower emissions intensity. Changes in load behaviour as a result of the consumer uptake of these vehicles will have significant consequences for network and central planners for the future of Australias electricity supply industry. This paper investigates the effects on the security of supply of energy during these previously unseen demand patterns, while also examining changes to spot market prices and changes in emissions rates. The simulation results indicate that wholesale prices during the off-peak period will increase slowly over time with controlled charging. While uncontrolled charging increases the incidence of extreme price events and a considerable number of hours with un-served energy within the network. This increase in spot prices will require further review by policy makers of regulated retail electricity tariffs. We also discuss the implementation of possible changes to the retail tariff structure to accommodate the charging of these vehicles.

Peak oil and energy security: can alternative fuels and vehicles save us?

Peak oil can be defined as the point in time when global oil production reaches its maximum annual rate, after which the annual production rate generally declines. Against an expected profile of growing demand for oil-based transport fuels, when peak oil occurs, it could create a growing transport fuel supply gap which, if not filled, would be expected to lead to very high prices for petroleum products in countries dependent on petroleum based transport. Australia is 97% dependent on petroleum fuels for transport. Given that a peak in global oil production cannot be ruled out within the next two decades to 2030, it is timely to examine the likely outcomes, particularly for petroleum product prices, in that event, and the role of alternative fuels and vehicles. This article presents one methodology, based on imposing fuel supply quantity constraints, for modelling Australian transport sector demand, and supply and price responses under a peak oil scenario.

Realizing the Potential of Renewable and Distributed Generation

Publisher Summary This chapter provides the results of a modeling analysis that considers the value that smart grids may provide by enabling the increased use of intermittent renewable and distributed generation. Modeling clearly shows that savings from allowing an increased proportion of intermittent renewable and distributed generation can be very significant when considering how the world may meet the dual challenge of reducing emissions of greenhouse gases while accommodating the ongoing growth in demand. These savings are only realized by considering the long-term change to energy supply because of the lifetimes of the assets involved. This has important implications for smart grid use, planning, and development, which will be needed to ensure these renewable technologies reach their full potential. The more traditionally noted benefits such as increased reliability, security, and consumer awareness, the development of a smart grid appears to be a very favorable mechanism to help the world reduce its green- house gas emissions while maintaining current levels of supply enjoyed in many of the worlds developed countries.

Towards Zero Carbon Scenarios for the Australian Economy

Australia’s high greenhouse gas (GHG) emissions per capita reflects its relatively high proportion of fossil fuels in energy consumed, high usage of less efficient private transport and high production of non-ferrous metals per capita. The dominance of coal-fired electricity generation masks Australia’s rich diversity of renewable energy resources. This analysis examines multiple pathways towards achieving deep GHG emissions reduction by 2050 towards a zero emission energy sector. The electricity and transport sectors can achieve the greatest GHG emissions reductions of 70–80% by 2050. The direct combustion sector has a harder abatement task owing to fewer directly substitutable low emission energy sources. Strong global climate ambition, supporting high carbon prices, and the successful management of high shares of variable renewable electricity (VRE) generation are important in achieving deep emission reductions. Further research and development is required to unlock the potential of additional sources of low emission energy such as hydrogen and solar thermal heat to ensure emissions can be completely eliminated without the need to purchase potentially higher cost emission credits from other domestic sectors or the international market.

Exploring the Value of Distributed Energy for Australia

This chapter examines the important role that distributed energy (DE) can play in smart grids in Australia to achieve a low carbon future. It discusses the findings of a recent major government-funded study which showed that uptake of DE could result in potential economic savings of around

Optimal distributed energy resources and the cost of reduced greenhouse gas emissions in a large retail shopping centre

130 billion by 2050. It also provides updates of more recent modelling that takes into account sensitivities in the price of natural gas and the price of solar photovoltaic (PV). This chapter further examines the key issues, opportunities and challenges of realising the value of DE in Australia. The analysis highlights the importance of integrating DE with the electricity grid and urban environment and discusses enablers and barriers for large-scale uptake of DE.