Power Trade, Welfare, and Air Quality
Abdurrahman Aydemir () and
Talat Genc ()
No 1401, Working Papers from University of Guelph, Department of Economics and Finance
We use detailed data from all generators in the Ontario wholesale electricity market to investigate cross-border electricity trade and its impact on air emissions and welfare in Ontario. Using the technical characteristics of the generators and financial data we run a competition model every hour and find that the model generates actual prices and outputs with 94.4% and 96% accuracy, respectively. We show that there is a significant welfare gain from power trade. The air emissions savings are also considerable. For instance, when hourly imports double from current levels CO2 emissions decrease around 13%, and market prices reduce 5.4%. In autarky, CO2, SO2, NOx emissions increase 12%, 22%, 16%, resp., the prices go up 5.8%, and the price volatility rises 12%. However, the impact of negative wholesale prices on market outcomes is small.
Keywords: Electricity trade; interconnected markets; air emissions; welfare (search for similar items in EconPapers)
JEL-codes: F18 L13 L94 (search for similar items in EconPapers)
Pages: 55 pages
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Journal Article: Power trade, welfare, and air quality (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:gue:guelph:2014-01
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