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An economic evaluation of the potential for distributed energy in Australia

William Lilley, Luke Reedman (luke.reedman@csiro.au), Liam Wagner, Colin Alie and Anthony Szatow
Additional contact information
William Lilley: Saudi Aramco
Colin Alie: Environment Canada
Anthony Szatow: ToshEnterprises

No 16, Energy Economics and Management Group Working Papers from School of Economics, University of Queensland, Australia

Abstract: Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO) recently completed a major study investigating the value of distributed energy (DE; collectively demand management, energy efficiency and distributed generation) technologies for reducing greenhouse gas emissions from Australia’s energy sector (CSIRO, 2009). This comprehensive report covered potential economic, environmental, technical, social, policy and regulatory impacts that could result from the wide scale adoption of these technologies. In this paper we highlight the economic findings from the study. Partial Equilibrium modeling of the stationary and transport sectors found that Australia could achieve a present value welfare gain of around $130 billion when operating under a 450 ppm carbon reduction trajectory through to 2050. Modeling also suggests that reduced volatility in the spot market could decrease average prices by up to 12% in 2030 and 65% in 2050 by using local resources to better cater for an evolving supply-demand imbalance. Further modeling suggests that even a small amount of distributed generation located within a distribution network has the potential to significantly alter electricity prices by changing the merit order of dispatch in an electricity spot market. Changes to the dispatch relative to a base case can have both positive and negative effects on network losses.

Keywords: Distributed energy; Economic modeling; Carbon price; Electricity markets (search for similar items in EconPapers)
JEL-codes: E17 Q40 Q42 Q47 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (12)

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