Program on Energy and Sustainable Development (PESD) Director Frank Wolak, Associate DIrector Mark Thurber, and doctoral candidate Trevor Davis led an Electricity Market Simulation Workshop as part of the 2018 Western Electricity Market Forum September 20-21 in Boise, Idaho. The audience was comprised of regulators and regulatory staff as well as policy makers representing states from across the western U.S.
The workshop used the PESD-developed Energy Market Game to explore timely questions about how electricity markets with a high share of renewable resources might function. “The Energy Market Game allows people of diverse backgrounds to understand market dynamics,” Thurber explained. “It can help policy makers and regulators set up incentives for market participants which naturally align with desired outcomes.”
The PESD team ran games with two contrasting policy approaches aimed at ensuring resource adequacy, with workshop participants playing the role of generating companies (“gencos”). In a high-renewable world, the specific resource adequacy concern is that thermal power plants won’t run enough to be profitable, and gencos therefore won’t build or keep enough thermal power plants to back up renewables when wind and sun aren’t available.
In the first game scenario, capacity markets were used to spur gencos to build enough gas-fired power plants to meet demand. Capacity markets straight-out pay gencos for holding generation capacity. They are used in a number of real-world electricity markets, but the games suggested they may not result in the cheapest power for consumers.
PESD Director Frank Wolak helps a workshop participant set up an Energy Market Game scenario.
PESD Director Frank Wolak helps a workshop participant set up an Energy Market Game scenario.
Photo Credit: Maury Galbraith, Western Energy Board
In the second game scenario, forward contracts for electricity created the incentive for gencos to build power plants. If a genco doesn’t produce enough electricity to cover its forward contract, it risks having to buy the shortfall out of the spot market at high prices. Forward contracts therefore encourage gencos not only to build adequate generation capacity, but also to bid that capacity into the market at competitive prices. As this second game scenario showed, that can mean cheaper power for consumers.
Abstract
As an increasing number of California households install solar panels, the current approach to retail electricity pricing makes it harder for the state’s utilities to recover their costs. Unless policymakers change how they price grid-supplied electricity, a regulatory crisis where a declining number of less affluent customers will be asked to pay for a growing share of the costs is likely to occur.
Solar photovoltaic (PV) products are touted as a leading solution to long-term electrification and development problems in rural parts of Sub-Saharan Africa. Yet there is little available data on the interactions between solar products and other household energy sources (which solar PVs are often assumed to simply displace) or the extent to which actual use patterns match up with the uses presumed by manufacturers and development agencies. This paper probes those questions through a survey that tracked approximately 500 early adopters of solar home systems in two off-grid markets in Africa. We find that these products were associated with large reductions in the use of kerosene and the charging of mobile phones outside the home. To a lesser extent, the use of small disposable batteries also decreased. However, solar home systems were, for the most part, not used to power radios, TVs, or flashlights. We also did not observe adopter households using these solar products to support income-generating activities.
Solar lanterns are promoted across rural Sub-Saharan Africa to improve both lighting in homes and educational outcomes. We undertake a randomized controlled trial in Zimba District, Zambia, to evaluate whether solar lanterns help children study more effectively and improve academic performance. Our research design accounts for potential income effects arising from the giveaways of lanterns and also “blinds” participants to the study’s purpose. We find no evidence that receipt of a lantern improved performance on important national examinations (even though an ex poststatistical power analysis demonstrates that the research should detect economically significant impacts, if present). We also do not observe impacts on self-reported study habits. Several features of Zimba District that are likely to exist in other developing regions appear to drive our results. First, flashlights are the dominant lighting source in rural Zambia rather than traditional options like kerosene lamps or candles. In such environments, solar lights may hold only limited appeal for prospective users. Second, our survey data suggests that other major barriers to educational attainment likely render improved energy access (whether through solar lanterns or otherwise) a relatively unimportant educational input.
Policies that promote biofuels in major agricultural economies raise important questions for food prices and food security at local to global scales. Global biofuel output rose from 38 billion liters to 131 billion liters between 2005 and 2015, boosting the demand for annual- and perennial-crop feedstocks such as maize, sugar, soy, rapeseed, and palm oil. Although ethanol volume was three times that of biodiesel in 2015, the share of biodiesel in total biofuel output rose from 10% to almost 25% over the course of the decade (EIA, n.d.; REN21, 2016). Biodiesel production increased 700% between 2005 and 2015 and is expected to rise by another 35% by 2025 (OECD/FAO, 2014). In this paper, we examine the linkages between biodiesel, oil crop, and energy markets, and ask: What are the food security implications of biodiesel policies in major agricultural economies? How do governments adjust biodiesel policies in response to international commodity prices, trade opportunities, and their changing economic and environmental priorities?
Although development organizations agree that reliable access to energy and energy services—one of the 17 Sustainable Development Goals—is likely to have profound and perhaps disproportionate impacts on women, few studies have directly empirically estimated the impact of energy access on women's empowerment. This is a result of both a relative dearth of energy access evaluations in general and a lack of clarity on how to quantify gender impacts of development projects. Here we present an evaluation of the impacts of the Solar Market Garden—a distributed photovoltaic irrigation project—on the level and structure of women's empowerment in Benin, West Africa. We use a quasi-experimental design (matched-pair villages) to estimate changes in empowerment for project beneficiaries after one year of Solar Market Garden production relative to non-beneficiaries in both treatment and comparison villages (n = 771). To create an empowerment metric, we constructed a set of general questions based on existing theories of empowerment, and then used latent variable analysis to understand the underlying structure of empowerment locally. We repeated this analysis at follow-up to understand whether the structure of empowerment had changed over time, and then measured changes in both the levels and likelihood of empowerment over time. We show that the Solar Market Garden significantly positively impacted women's empowerment, particularly through the domain of economic independence. In addition to providing rigorous evidence for the impact of a rural renewable energy project on women's empowerment, our work lays out a methodology that can be used in the future to benchmark the gender impacts of energy projects.
Dr. Forbes chairs the Steam Engineering Companies of Forbes Marshall, India’s leading Steam Engineering and Control Instrumentation firm.
Dr. Forbes was an occasional Lecturer and Consulting Professor at Stanford University from 1987 to 2004, where he developed courses on technology in newly industrializing countries. He received his Bachelors, Masters and PhD degrees from Stanford University.
Dr. Forbes is on the Board of several educational institutions and public companies. He is the Chairman of Centre for Technology, Innovation and Economic Research in Pune. He has long been an active member of CII and has, at various times, chaired the National Committees on Higher Education, Innovation, Technology and International Business. He was President of CII from 2016-2017.
About the Colloquia:
In 2016, the Walter H. Shorenstein Asia-Pacific Research Center, in collaboration with the Stanford Center for South Asia, launched a series of public lectures to broaden our understanding and discussion of contemporary India — its enormous domestic potential and problems, its place in the region and the world, and the ambitious agenda of the new Modi administration. Building on the strong engagement of those issues from across the university community and beyond, we are continuing the series, with generous support from the U.S. India Business Council, in the 2017-2018 academic year. We will draw business, political, diplomatic and academic experts from the U.S. and India to explore topics including India’s innovation economy, India-China relations, India’s pivotal role in global health, and U.S.-India relations.
This Colloquia is co-sponsored with
