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The Macroeconomic Effects of Efficiency Gains in Electricity Production in Malta

Noel Rapa

No PP/05/2017, CBM Policy Papers from Central Bank of Malta

Abstract: This note studies the impact energy market reforms might have on the Maltese economy in the medium-to-long run using a DSGE model. Contrary to previous studies, this note takes in consideration the changes in the marginal cost of electricity production of Enemalta under a number of energy production setups. Results show that the decommissioning of the Marsa power plant and the installation of an undersea interconnector results in a fall in marginal costs, and therefore an increase in long run output, under both baseline and high oil price scenarios ranging between 1.61% and 2.53%. This energy setup is however consistent with an increase in marginal costs, and therefore a fall in long run output of 0.41% in the case of a low oil price scenario. The future setup of natural gas fired turbines results in a fall in marginal costs and an increase in long run output in all oil price scenarios, ranging between 0.81% in the low oil price scenario to 3.00% in case of high oil prices.

JEL-codes: D58 E37 Q43 (search for similar items in EconPapers)
Pages: 13 pgs
New Economics Papers: this item is included in nep-cmp, nep-ene and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.centralbankmalta.org/file.aspx?f=61643 First version, 2017 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mlt:ppaper:0517

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