{"title":"Finding opportunity in economic power dispatch: Saving fuels without impacting retail electricity prices in fuel-producing countries","authors":"Marie Petitet, Frank A. Felder, Amro M. Elshurafa","doi":"10.1016/j.eneco.2024.107841","DOIUrl":null,"url":null,"abstract":"<div><p>In many oil- and natural gas-producing countries, fuels are allocated to the electricity sector at administratively set prices below international market prices for domestic policy reasons. This article shows that dispatching power units based on the opportunity costs of domestically used fuels can yield significant efficiencies, while end-user electricity prices can continue to reflect administratively set fuel prices. In addition, opportunity cost dispatch can bring environmental benefits when it results in switching the priority of oil and gas units in the merit order and facilitating investments in renewable energy. Therefore, this approach can support long-term net-zero emission targets. It can also resolve cross-border electricity trading issues faced by fuel-rich countries, which are reluctant to base their electricity exports on domestic fuel prices.</p></div>","PeriodicalId":11665,"journal":{"name":"Energy Economics","volume":"138 ","pages":"Article 107841"},"PeriodicalIF":13.6000,"publicationDate":"2024-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0140988324005498/pdfft?md5=c553dcbd8d2870b0ea47cb1042bec2e7&pid=1-s2.0-S0140988324005498-main.pdf","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Energy Economics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0140988324005498","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
In many oil- and natural gas-producing countries, fuels are allocated to the electricity sector at administratively set prices below international market prices for domestic policy reasons. This article shows that dispatching power units based on the opportunity costs of domestically used fuels can yield significant efficiencies, while end-user electricity prices can continue to reflect administratively set fuel prices. In addition, opportunity cost dispatch can bring environmental benefits when it results in switching the priority of oil and gas units in the merit order and facilitating investments in renewable energy. Therefore, this approach can support long-term net-zero emission targets. It can also resolve cross-border electricity trading issues faced by fuel-rich countries, which are reluctant to base their electricity exports on domestic fuel prices.
期刊介绍：
Energy Economics is a field journal that focuses on energy economics and energy finance. It covers various themes including the exploitation, conversion, and use of energy, markets for energy commodities and derivatives, regulation and taxation, forecasting, environment and climate, international trade, development, and monetary policy. The journal welcomes contributions that utilize diverse methods such as experiments, surveys, econometrics, decomposition, simulation models, equilibrium models, optimization models, and analytical models. It publishes a combination of papers employing different methods to explore a wide range of topics. The journal's replication policy encourages the submission of replication studies, wherein researchers reproduce and extend the key results of original studies while explaining any differences. Energy Economics is indexed and abstracted in several databases including Environmental Abstracts, Fuel and Energy Abstracts, Social Sciences Citation Index, GEOBASE, Social & Behavioral Sciences, Journal of Economic Literature, INSPEC, and more.
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