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Teaching Microeconomics of Renewable Energy ISEE Conference Reykja vík , Iceland August 13, 2014

Teaching Microeconomics of Renewable Energy ISEE Conference Reykja vík , Iceland August 13, 2014 David Timmons University of Massachusetts Boston david.timmons@umb.edu. Renewable Energy: Physical Basis. Dam functions: 1. create head 2. store water (store energy).

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Teaching Microeconomics of Renewable Energy ISEE Conference Reykja vík , Iceland August 13, 2014

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  1. Teaching Microeconomics of Renewable Energy ISEE Conference Reykjavík, Iceland August 13, 2014 David Timmons University of Massachusetts Boston david.timmons@umb.edu

  2. Renewable Energy: Physical Basis Dam functions: 1. create head 2. store water (store energy) photo: Orkustofnun, Iceland National Energy Authority kW = 9.8ηQH

  3. Renewable Energy: Physical Basis W = 0.5 ρAV3

  4. Renewable Energy Cost Factors: Net Energy Ratios Adapted from Murphy and Hall (2010)

  5. Renewable Energy Cost Factors: Capital Intensity Adapted from EIA (2013)

  6. Renewable Energy Cost Factors: Intermittency pumped storage: Northfield, Massachusetts

  7. Renewable Energy Supply 2012 $/kWh terawatts (TW) 2030 est. demand = 17 TW source: Jacobson and Delucchi (2011) source: EIA (2014)

  8. Renewable Energy Supply P MCH Q A. Hydropower: low initial cost, but limited quantity Microeconomic Concepts: marginal cost

  9. Renewable Energy Supply P P MCH MCW Q Q A. Hydropower: low initial cost, but limited quantity B. Wind: higher cost, higher quantity Microeconomic Concepts: marginal cost

  10. Renewable Energy Supply P P P MCH MCW MCPV Q Q Q C. Solar PV: highest cost, unlimited quantity A. Hydropower: low initial cost, but limited quantity B. Wind: higher cost, higher quantity Microeconomic Concepts: marginal cost supply elasticity

  11. Renewable Energy Supply P P P P MCH MCW MCPV MCagg Q Q Q Q C. Solar PV: highest cost, unlimited quantity D. Aggregate renewable supply, and demand A. Hydropower: low initial cost, but limited quantity B. Wind: higher cost, higher quantity Microeconomic Concepts: marginal cost supply elasticity aggregate supply

  12. Renewable Energy Supply P P P P MCH MCW MCPV MCagg D Q Q Q Q C. Solar PV: highest cost, unlimited quantity D. Aggregate renewable supply, and demand A. Hydropower: low initial cost, but limited quantity B. Wind: higher cost, higher quantity Microeconomic Concepts: marginal cost supply elasticity aggregate supply market equilibrium

  13. Renewable Energy Supply P P P P MCH MCW MCPV MCagg D Q Q Q Q C. Solar PV: highest cost, unlimited quantity D. Aggregate renewable supply, and demand A. Hydropower: low initial cost, but limited quantity B. Wind: higher cost, higher quantity Microeconomic Concepts: marginal cost supply elasticity aggregate supply market equilibrium equimarginal principle

  14. Renewable Energy Supply P P P P MCH MCW P MCPV MCagg MCC D Q Q Q Q Q C. Solar PV: highest cost, unlimited quantity D. Aggregate renewable supply, and demand A. Hydropower: low initial cost, but limited quantity B. Wind: higher cost, higher quantity E. Conservation: high quantity available at MC of solar PV Microeconomic Concepts: marginal cost supply elasticity aggregate supply market equilibrium equimarginal principle

  15. Geothermal Heating in Iceland PJ (petajoule) 160 140 120 100 80 60 40 20 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 1 petajoule = 1015 joule = 0,278 TWh Source: Orkustofnun 2004 Geothermal Hydro Power Peat Oil Coal

  16. Geothermal Heating in Iceland PJ (petajoule) 160 100% Proportional contribution of sources 140 80% 120 60% 100 40% 80 20% 60 0% 1900 1920 1940 1960 1980 2000 40 20 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 1 petajoule = 1015 joule = 0,278 TWh Source: Orkustofnun 2004 Geothermal Hydro Power Peat Oil Coal

  17. Geothermal Heating in Iceland

  18. Geothermal Heating in Iceland Ísafjörður

  19. District Heat Energy Sources 2008 District Heating System Ísafjörður, Iceland Population: 2,600 oil, 4% incinerator, 10% electricity, 86% incinerator plant Midtown District (Skutulsfjardareyri) Southern District (Holtahverfi)

  20. Renewable Energy Transition Dynamics P MCfossil MCrenewable1 Time t1

  21. Renewable Energy Transition Dynamics P MCfossil MCrenewable1 MCrenewable2 Time t2 t1

  22. Renewable Energy Transition Dynamics P MCfossil SMCfossil MCrenewable2 Time t3 t2

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