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Economic Policy Making for Energy Markets

Economic Policy Making for Energy Markets. Challenges. Have MBAs /social scientists and engineers work together Engineer: I want to b uild the best gadget Economists: Only build it of the benefits outweigh the costs Acknowledgement: EPRG. Economic Challenge .

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Economic Policy Making for Energy Markets

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  1. Economic Policy Making for Energy Markets

  2. Challenges • Have MBAs/social scientists and engineers work together • Engineer: I want to build the best gadget • Economists: Only build it of the benefits outweigh the costs • Acknowledgement: EPRG

  3. Economic Challenge • Design/engineer a social system (i.e. policies) such that individual decisions will produce the desired outcome (e.g. reduce CO2 emissions). • Examples of systems: • European emissions trading • Feed-in tariffs • Network regulation (my topic)

  4. Energy Policy Objectives • Reliable/consistent policy (security of supply) • In South Africa bad policies led to insecure supply • Low carbon (allow wind farms to connect to network) • Low cost (competition between generators) • Reliable energy (provide a return for investment).

  5. UK Challenge • Consistent policy: • Politicians want particular system (markets) AND particular outcome (more renewables) which leads to investment uncertainty. • Devise policies that take advantage of UK renewables potential.

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