Potential gains of long-distance trade in electricity

Javier L\'opez Prol, Karl W. Steininger, Keith Williges, Wolf D. Grossmann and Iris Grossmann

Papers from arXiv.org

Abstract: Electrification of all economic sectors and solar photovoltaics (PV) becoming the lowest-cost electricity generation technology in ever more regions give rise to new potential gains of trade. We develop a stylized analytical model to minimize unit energy cost in autarky, open it to different trade configurations, and evaluate it empirically. We identify large potential gains from interhemispheric and global electricity trade by combining complementary seasonal and diurnal cycles. The corresponding high willingness to pay for large-scale transmission suggests far-reaching political economy and regulatory implications.

Date: 2022-05
New Economics Papers: this item is included in nep-ene and nep-int
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