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[en] Grid infrastructure managers worldwide are facing demands for reinvestments in new assets with higher on-grid and off-grid functionality in order to meet new environmental targets. The roles of the current actors will change as the vertical interfaces between regulated and unregulated tasks become blurred. In this paper, we characterize some of the effects of new asset investments policy on the network tasks, assets and costs and contrast this with the assumptions of the current economic network regulation. To provide structure, we present a model of investment provision under regulation between a distribution system operator and a potential investor–generator. The results from the model confirm the hypothesis that network regulation should find a focal point, should integrate externalities in the performance assessment and should avoid wide delegation of contracting-billing for smart-grid investments. - Highlights: ► We review regulatory solutions for smart-grid and DER investments. ► What matters more than upfront incentives is organization and delegation. ► We model regulated investment under private information by a generator or a DSO. ► Highest welfare for high-powered incentives and centralized information. ► Market approaches likely to give poor outcomes for this case.
[en] The literature on sustainable energy technology sees informational barriers as a major obstacle to technology adoption. In the case of solar home systems, recent studies report positive socio-economic effects on households, but technology adoption remains underwhelming. In collaboration with a local solar technology provider, we conduct a randomized controlled trial in 75 large villages in the state of Uttar Pradesh, India to examine the ability of village solar demonstrations to create markets for solar home systems. We find no effect of such demonstrations on technology sales, awareness, or perceptions of solar technology. Technology adopters report high levels of satisfaction with product quality and service, suggesting that the null finding cannot be attributed to poor technology. These findings suggest that lack of awareness is not a binding constraint on the growth of solar technology markets in the study area. Based on additional surveys, we find evidence suggesting that access to credit from rural banks is an important explanation for variation in sales across villages. These results do not prove that information and awareness are irrelevant in general, but they show that even carefully designed marketing campaigns cannot increase demand for new products in the presence of a binding credit constraint. - Highlights: • Randomized controlled trial on off-grid solar technology demonstrations in rural India. • Demonstrations did not increase product sales. • Main barrier to increased sales appears to be lack of access to credit. • Growth of India?s off-grid solar market requires policies that increase access to credit. • Rural banks should play a greater role in solar market creation.
[en] The resilience of social, biophysical, and technological systems is of increasing scholarly and practical import. Guided by scholarship on disaster resilience, environmental inequality, and urban service inequality, we advance the study of “unequal resilience” in a critical infrastructure – the electric grid. We analyze inequality in electricity outage duration at the census block group level using data from the U.S. Census, the U.S. Geological Survey, and a U.S. electrical utility's database of power outages from 2002 to 2004. Our intersectional approach identifies a factor variable of American Indian disadvantage as a correlate of average outage duration – suggesting possible support for an institutional bias hypothesis. However, spatial error regression models demonstrate that unequal resilience within our study area is most consistently explained by proximity to priority assets (i.e., hospitals), average downstream customers affected by outages, and environmental conditions (i.e., the seasonality of outages). These results are consistent with existing research on utilities' response to power outages, and more broadly with the bureaucratic decision rules perspective on service inequalities. We discuss the implications of our findings for future research and energy policy. - Highlights: • Examines unequal resilience as differences in outage duration in an electric grid. • Connects US Census sociodemographics with utility outage data. • Outage duration positively correlated with American Indian disadvantage. • Spatial regression: bureaucratic decision rules explain outage duration patterns. • Policy implications for U.S. regulatory compact and energy assistance programs.
[en] After deregulation of the energy market in Norway, a number of mergers and acquisitions of hydropower generating companies have taken place. However, valuation of these companies has proved controversial. From an ex-post perspective, there is support for the criticism that generation assets have been sold too cheaply. This article presents a simple valuation model providing evidence of how value has evolved. On the basis of these results, we discuss the valuation from an ex ante perspective and in the light of the market efficiency hypothesis of. (author)
[en] In the European Union, the natural gas market is increasingly being liberalized. The liberalization process is aimed at leading to lower prices and higher volumes, and hence higher consumer welfare. This paper focuses on the changes in performance in the natural gas retail market by analyzing the profit and financial position of the companies concerned over the first three years following the market liberalization. The balance sheets of 105 Italian companies in this sector are analyzed, after which a cluster analysis is performed employing the most significant performance indexes. The companies are then analyzed within each cluster with respect to age, size, geographical location and business diversification. The results of our analysis show that the majority of companies attained a high level of performance, although this positive outcome was mitigated by the gradual decrease of the average values of performance indicators during the period concerned. The companies that achieve the best performances belong to longstanding business groups, are medium-large sized and are located in the north of the country. Regarding business diversification, in the first two years, the specialised companies outperformed the diversified companies. (author)
[en] After deregulation of the energy market in Norway, a number of mergers and acquisitions of hydropower generating companies have taken place. However, valuation of these companies has proved controversial. From an ex-post perspective, there is support for the criticism that generation assets have been sold too cheaply. This article presents a simple valuation model providing evidence of how value has evolved. On the basis of these results, we discuss the valuation from an ex ante perspective and in the light of the market efficiency hypothesis of (Fama, 1970) and (Fama, 1991).
[en] Development of Mexican hydrocarbon reservoirs by foreign operators is now made possible by the energy reforms implemented in 2015. This study benchmarks the economic return of deepwater hydrocarbon field development projects located in the Perdido foldbelt at either side of the maritime border between the United States and Mexico to assess the competitiveness of the respective fiscal frameworks. We use a nodal analysis production model to first history match real field performance in the US Perdido project and then forecast production of an analogous, undeveloped field in the Mexican extension of the Perdido foldbelt, Gulf of Mexico. The new Mexican profit sharing contract imposes basic royalties that appear equitable for both the contractor and the government, albeit slightly less attractive than the to the U.S. federal lease terms. The contracts for deepwater assets in Mexico open up commercially viable options, provided the oil price will recover to render such oil projects profitable. Our sensitivity analysis shows that profitable development of 300 MMbbls oil in place becomes possible when oil prices rise above $75/bbl. For larger reservoirs (~900 MMbbls) the profit hurdle rate of 15% is already met for $60/bbl. Any over-royalty offered by a contractor in the bidding process renders the royalties in Mexican operations slightly higher than in the U.S. - Highlights: • Mexican energy reform allows hydrocarbon development by foreign operators. • First benchmark of Transboundary hydrocarbon projects in Gulf of Mexico. • Perdido reservoirs appraised in cash flow analysis for US and Mexican taxes. • New Mexican profit sharing contracts are competitive with US offshore leases.
[en] We argue that 'the 2008 Oil Bubble' was directly and indirectly created by the Federal Reserve in response to deflationary risks that resurfaced after the housing bubble burst and the resulting credit crisis of 2008. Deflationary risks first appeared after the dot.com bubble burst in 2000 and after the terrorist attacks on September 11, 2001. Manipulation of the US dollar value has been one of the key emergency tools in the Fed's arsenal. During the entire period from 2000 to 2008, the US dollar has been falling, while the price of crude oil has been rising, with the culmination in July 2008. If other global central banks embrace the Fed's anti-deflationary strategies, the consequences could be dire for the global economy, potentially resulting in an ultimate gold bubble. (author)
[en] The upstream oil and gas industry has been contending with massive data sets and monolithic files for many years, but “Big Data” is a relatively new concept that has the potential to significantly re-shape the industry. Despite the impressive amount of value that is being realized by Big Data technologies in other parts of the marketplace, however, much of the data collected within the oil and gas sector tends to be discarded, ignored, or analyzed in a very cursory way. This viewpoint examines existing data management practices in the upstream oil and gas industry, and compares them to practices and philosophies that have emerged in organizations that are leading the way in Big Data. The comparison shows that, in companies that are widely considered to be leaders in Big Data analytics, data is regarded as a valuable asset—but this is usually not true within the oil and gas industry insofar as data is frequently regarded there as descriptive information about a physical asset rather than something that is valuable in and of itself. The paper then discusses how the industry could potentially extract more value from data, and concludes with a series of policy-related questions to this end. -- Highlights: •Upstream oil and gas industry frequently discards or ignores the data it collects •The sector tends to view data as descriptive information about the state of assets •Leaders in Big Data, by stark contrast, regard data as an asset in and of itself •Industry should use Big Data tools to extract more value from digital information
[en] This paper contrasts the potential increase in gas-fired power generation in the UK in the period to 2020 with the ambitious decarbonisation goals set forth for this sector. An increase in Combined Cycle Gas Turbine (CCGT) capacity, in particular, only represents a threat to long-term decarbonisation if some ‘lock-in’ exists. It is against this background, and in the interest of challenging the perception of no significant lock-in to gas-fired generation, that this paper identifies investment lock-in as phenomenon of relevance to policy-makers. The paper determines both direct and indirect ways in which investment in significant new CCGT capacity could negatively impact on the likelihood of meeting decarbonisation goals through ‘locking-in’ the existing technological system. It also identifies that the technical lifetime, and not just the capital repayment period, of CCGT assets is relevant in understanding the strength of the lock-in. Finally, a regulatory structure that aligns with the long-term targets in place is identified as providing a clear signal for investors and asset owners that may reduce the risk of ‘investment lock-in’. - Highlights: ► The potential conflict between new CCGT and decarbonisation targets is examined. ► A form of ‘hysteretic lock-in’ associated with CCGT investment is identified. ► Potential effects of ‘lock-in’ from new CCGT investment in the UK are highlighted. ► The paper argues for a clear long-term regulatory structure for new CCGT generation.