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Economic FactorsAuthor(s): Heptonstall, P.
Published: 2007
Publisher: UKERC
The principal aims of this paper are to examine the range of reported unit costs for major generating technologies, show the range of estimates, explain where possible the reasons for the range, and show to what extent there is any clustering around central values. In addition, the paper explains the components of unit cost calculations and discussed what is, and is not, included in these calculations.
Author(s): Day, G.
Published: 2017
Publisher: ETI
Author(s): Blondeel, M., Bradshaw, M., Froggatt, A. and Kuzemko, C.
Published: 2022
Publisher: UKERC
Author(s): ETI
Published: 2017
Publisher: ETI
Author(s): ETI
Published: 2017
Publisher: ETI
Author(s): Lidstone, L.
Published: 2017
Publisher: ETI
Author(s): Gross, R.
Published: 2005
Publisher: UKERC
The note is aimed at informed commentators and therefore takes some knowledge for granted – for example of terminology, recent literature and the principal concepts. Its focus is on why and where opinions differ, and the objective is to highlight questions and disagreements, but not answer or resolve either. A more general introduction to the subject is provided in the project scoping note and protocol.
Feedback and comment is invited on all of what follows, and in particular on the set of summary questions at the end of this note.
The remainder of this note covers the following topics:
Author(s): Durusut, E. and Tahir, F.
Published: 2016
Publisher: ETI
Author(s): Beaumont, N., Gross, R., Hanna, R., Taylor, P., Wade, F. and Webb, J.
Published: 2020
Publisher: UKERC
Author(s): Stegman, A.
Published: 2017
Publisher: ETI
Author(s): Watson, J., Gross, R., Bell, K., Waddams, C., Temperton, I., Barrett, J., Rhodes, A., Gill, S. and Bays, J
Published: 2017
Publisher: UKERC
We welcome the opportunity to comment on the findings of the Cost of Energy Review, conducted by Professor Dieter Helm. In our response, we address most of the questions set out in the Call for Evidence from BEIS. Before turning to these specific questions, we have three general observations about the Review and the Call for Evidence.
First, whilst the review title focuses on the cost of energy, this is misleading. The terms of reference and the Review report make it clear that the main focus is electricity rather than energy in general.
This distinction is important since the data shows significant differences in the position of UK electricity and gas costs when compared to costs in other countries. There are also differences between relative costs for households and relative costs for business energy consumers. UK electricity prices are higher up the European league table than prices for gas. Electricity prices for energy intensive industries in the UK are particularly high.
Our second comment is that there are important distinctions between prices, costs and bills. Whilst much of the debate focuses on prices, the costs of energy for consumers also depends on their energy consumption. Therefore, it is also important to consider energy efficiency of buildings, appliances and industrial processes since these are a key determinant of costs.
Our third comment is that costs need to be considered for the electricity system as a whole. Whilst the separate questions in the Call for Evidence about generation, networks and retail supply are understandable, costs to consumers partly depend on interactions between these components of the electricity system. This compartmentalised approach to the evidence base could mean that some of these systemic interactions are missed.
Author(s): ETI
Published: 2017
Publisher: ETI
Author(s): ETI
Published: 2017
Publisher: ETI
Author(s): ETI
Published: 2016
Publisher: ETI
Author(s): Bell, K., Blyth, W., Bradshaw, M., Green, R., Gross, R., Jansem, M., Ostrovnaya, A. and Webb, J.
Published: 2022
Publisher: UKERC
Author(s): Anderson, D.
Published: 2007
Publisher: UKERC
The paper first discusses estimates of the levelised costs of selected technologies and the corresponding rates of return under alternative assumptions as to prices. It then shows how such estimates can be refined to allow for the variability of demand, changes in plant dispatching schedules, storage and so forth. Next it considers the effects of environmental policies and innovation on costs and the rate of return. Finally it considers the issues posed by uncertainty and risks. By beginning with the simple cases of levelised costs and average returns, and then by gradually peeling away assumptions, the aim is to gradually reveal the fundamentally different perspective that arises when the rate of return becomes the focus of investment.
Author(s): Hamilton. K
Published: 2023
Publisher: UKERC
Author(s): Ternent, L.
Published: 2016
Publisher: ETI
Author(s): Skea, J.
Published: 2005
Publisher: UKERC
The UK Energy Research Centre welcomes this opportunity to provide input to the Stern Review on the Economics of Climate Change.
The Centre was established in 2004 following a recommendation from the 2002 review of energy initiated by Sir David King, the UK Government’s Chief Scientific Advisor. It is funded by three research councils: the Engineering and Physical Sciences Research Council (EPSRC), the Natural Environment Research Council (NERC) and the Economic and Social Research Council (ESRC). We take a co-ordinated and collaborative approach to national and international energy research, and through our own interdisciplinary research activities, we intend to provide the knowledge needed to work towards a sustainable energy system and realise UK energy policy goals.
We are a distributed Centre operated by a consortium of eight universities and research institutions. Our work is relevant to items 1 and 4 of the Review Terms of Reference, i.e.
Four of our research themes are undertaking research relevant to the Review. These are:
Author(s): Blyth, W.
Published: 2006
Publisher: UKERC
This report provides a brief review of how risks can be incorporated into investment decisions, and how financial analysis needs to go beyond an assessment of levelised costs in order to adequately represent the different sources of risk that a new power plant investment will face in competitive markets.
Author(s): Cairns, I., Hannon, M., Braunholtz-Speight, T., Hardy, J., McLachan, C., Mander, S., Manderson, E. and Sharmina, M.
Published: 2020
Publisher: UKERC
Commencing in 2016, the Financing Community Energy project provides a comprehensive quantitative and qualitative analysis of the role of finance in the evolution of the UK community energy sector. This report presents the final of our four case studies of UK community energy organisations, exploring how these organisations have sought to finance their projects against a backdrop of diminishing government support for grassroots sustainable development.
Established in 2013, Brighton and Hove Energy Services (BHESCo) primary focus was to develop both renewable energy and energy efficiency projects, whilst also ensuring people have equal access to energy. BHESCo is rather unlike our other community energy case studies in that it operates very much like an Energy Services Company (ESCo), where they accept some degree of responsibility to provide the energy service that its customers ultimately desire (e.g. lighting, ambient temperature), rather than the straightforward supply of heat or electricity.
Author(s): Cairns, I., Hannon, M., Braunholtz-Speight, T., Hardy, J., McLachan, C., Mander, S., Manderson, E. and Sharmina, M.
Published: 2020
Publisher: UKERC
This report presents a case study of Edinburgh Community Solar Cooperative, exploring how it financed the project against a backdrop of diminishing government support for grassroots sustainable development.
This report presents the first of four case studies of UK community energy organisations, exploring how these organisations have sought to finance their projects against a backdrop of diminishing government support for grassroots sustainable development.
Edinburgh Community Solar Cooperative (ECSC) is a Community Benefit Society (BenCom). Its objectives are a combination of environmental and social, with an explicit focus on reducing emissions, alleviating fuel poverty, improving energy security and promoting sustainable development education.
ECSC quickly settled on renewable power generation as a means of delivering this combination of environmental andsocial value. Today it operates 1.4 MW of solar PV panels on the roofs of 24 council-owned properties in Edinburgh, including schools, leisure centres and community halls.
Author(s): Cairns, I., Hannon, M., Braunholtz-Speight, T., Hardy, J., McLachan, C., Mander, S., Manderson, E., Sharmina, M.
Published: 2020
Publisher: UKERC
Commencing in 2016, the Financing Community Energy project provides a comprehensive quantitative and qualitative analysis of the role of finance in the evolution of the UK community energy sector. This report presents the second of four case studies of UK community energy organisations, exploring how these organisations have sought to finance their projects against a backdrop of diminishing government support for grassroots sustainable development.
Green Energy Mull (GEM) is a Community Benefit Company (BenCom) that owns and operates Garmony Hydro; a 400 kW run-of-the-river hydro scheme on the island of Mull, off the west coast of Scotland.
Author(s): Cairns, I., Hannon, M., Braunholtz-Speight, Tim., Hardy, J., Mclachan, C., Mander, S., Manderson, E., Sharmina, M.
Published: 2020
Publisher: UKERC
Commencing in 2016, the Financing Community Energy project provides a comprehensive quantitative and qualitative analysis of the role of finance in the evolution of the UK community energy sector. This report presents the third of four case studies of UK community energy organisations, exploring how these organisations have sought to finance their projects against a backdrop of diminishing government support for grassroots sustainable development.
Gwent Energy (Wales) was formed in 2009 to deliver environmental benefit and cost savings to its local community. It aims to help local consumers save money on their energy bills through a combination of renewable energy, efficiency, storage and electric vehicle charging interventions, whilst simultaneously generating a surplus to fund local community initiatives.
Author(s): Energy Systems Catapult
Published: 2016
Publisher: ETI
Author(s): Energy Systems Catapult
Published: 2016
Publisher: ETI
Author(s): Watkins, J. and Farrington, J.
Published: 2016
Publisher: ETI
Author(s): Watkins, J. and Farrington, J.
Published: 2016
Publisher: ETI
Author(s): Energy Systems Catapult
Published: 2017
Publisher: ETI
Author(s): Barrett, J., Owen, A. and Taylor, P
Published: 2018
Publisher: UKERC
To recover the cost of energy policies which support the transition towards a low carbon energy system, levies are applied to household and business energy bills. This briefing note focuses on the levies applied to households.
Household energy policy costs
Energy policy costs are applied to household electricity and gas bills, equating to 132, or 13% of the average energy bill in 2016. This research highlights how low-income households are hit hardest by the current arrangements as the poorest households spend 10% of their income on heat and power in their homes, whereas the richest households only spend 3%, so any increase in prices hits the poor disproportionately.
Energy service demands in the UK
Household electricity and gas use represents only 12% of total final UK energy use. Total energy use includes all the energy used to provide househ
Author(s): Greenacre, P., Gross, R. and Heptonstall, P.
Published: 2010
Publisher: UKERC
This report was produced by the UK Energy Research Centre’s (UKERC) Technology and Policy Assessment (TPA) function.
The primary objective of the TPA, reflected in this report, is to provide a thorough review of the current state of knowledge. New research, such as modelling or primary data gathering may be carried out when essential. It also aims to explain its findings in a way that is accessible to non-technical readers and is useful to policymakers.
Author(s): Baringa Partners LLP
Published: 2017
Publisher: ETI
Author(s): Buro Happold
Published: 2016
Publisher: ETI
Author(s): Foxon, T.J., Kohler, J. and Neuhoff, K.
Published: 2006
Publisher: UKERC
The two workshops aim to:
The full presentations are available on the UKERC Meeting Place website. This report provides a summary of the presentations and discussions at the first workshop.
Author(s): Gross, R., Heptonstall, P. and Blyth, W.
Published: 2007
Publisher: UKERC
This report provides an analysis of the link between investment risks in electricity generation and policy design. The issues it discusses are relevant to a wide range of policy developments in the UK and elsewhere. These include banding the Renewables Obligation, bringing forward the development of power stations with carbon capture, financial support for nuclear power and the future of emissions trading.
Author(s): Hamilton, K.
Published: 2007
Publisher: UKERC
This working paper sets out to provide a short introduction to risk and return in making financing and investment decisions in the energy sector, focusing on renewable energy. It will specifically draw on the outcomes of consultation roundtables with financiers on renewable energy policy to illustrate what financiers need from policy to reduce risk and increase returns; what types of issues arise in different policy frameworks; and how policy can affect the attractiveness of different investments. The review of the UK’s Renewables Obligation policy provides a useful focal point for illustrating the latter.
Author(s): Snell, C. and Bevan, M.
Published: 2018
Publisher: UKERC
Despite disabled people and low-income families with children being defined in policy as vulnerable to fuel poverty, there is very little evidence about how the needs of these groups are recognised or incorporated into policy decisions. There is alsono clear evidence on how energy efficiency policies actually affect these groups, and whether policy outcomes are consistent across the UK.
This policy briefingauthored by University of Yorks Department of Social Policy and Social Work (SPSW) and ACE Research, explores some of the key gaps in knowledge regarding justice in energy efficiency policy in the UK. The focus was on the impact of energy efficiency policies on disabled people, those with long-term illnesses and low-income households with children.
The delivery of energy efciency policy is variable and patchy, with vulnerable groups ingreatest need not always eligible for support, or receiving support which fails to reflect their additional needs. To improve access for vulnerable groups and to meet their needs more effectively, the authors recommenda greater recognition of the needs of vulnerable groups, more consistent approaches across the UK and better cooperation with non-energy sectors.
The researchidentifies five key barriers to accessing vital fuel poverty support mechanisms and suggests ways in which access and outcomes can be improved for all.
Author(s): Ekins. P., Keppo. I., Skea. J., Strachan. N., Usher. W. and Anandarajah. G.
Published: 2013
Publisher: UKERC
This briefing draws out the key messages from the UKERC report The UK Energy System in 2050: comparing low-carbon resilient scenarios, – which describes and compares a series of model runs, implemented through the UK MARKAL modelling system, which was developed through UKERC with funding from the Research Councils’ Energy Programme. This has revealed some consistent patterns showing how the UK energy system might develop in future, which are discussed in detail in the full report.
Author(s): Gross, R.
Published: 2006
Publisher: UKERC
The reason for producing this note is that two distinct strands of thought can be found in the literature on how to conceptualise the costs associated with any additional capacity required to maintain reliability when intermittent generators are added to an electricity network. The first does not explicitly define a system reliability cost rather it assesses the overall change in system costs that arises from additional capacity (Dale et al 2003). This approach can be used to derive system reliability cost if combined with an assessment of the impact on load factors of incumbent stations when new generators are added (see footnote 2). The second includes an explicit system reliability cost. This approach requires that we make an assumption about the nature of the plant that provides back up(Ilex and Strbac 2002). Both approaches should arrive at the same change in total system costs.
Author(s): ETI
Published: 2011
Publisher: ETI
Author(s): Oreszczyn, T., Hamilton, I., Mavrogianni, A., Oikonomou, E., Raslan, R., Smith, A., Spataru.C. and Stone, A
Published: 2011
Publisher: ETI
Author(s): Beaumont, N., Bell, K., Flower, J., Gross, R., Hanna, R., Qadrdan, M., Rhodes, A., Speirs, J., Taylor, P., Webb, J. and Wu. J.
Published: 2022
Publisher: UKERC
Author(s): ETI, E4Tech, Imperial College Consultants (ICON),
Published: 2015
Publisher: ETI
Author(s): Hurley, W.L. and Nortstrom, C.J.
Published: 2015
Publisher: ETI
Author(s): Bonsall, P., Cross, J., and Shepherd, J.
Published: 2011
Publisher: ETI
Author(s): Cross, J., Reid, R., Butcher, N., Bonsall, P. and Shepherd, S.
Published: 2011
Publisher: ETI
Author(s): Guest, P., Anelli, D., Jakeman, N. and Ballardin, G.
Published: 2011
Publisher: ETI
Author(s): ETI
Published: 2011
Publisher: ETI
Author(s): Cross, J., and Guri, N.
Published: 2011
Publisher: ETI
Author(s): Cross, J.
Published: 2011
Publisher: ETI
Author(s): ETI
Published: 2011
Publisher: ETI
Author(s): Reid, R., Bonsall, P. and Butcher, N.
Published: 2011
Publisher: ETI
Author(s): Cairns, S. and Newson, C.
Published: 2005
Publisher: UKERC
This paper argues that reducing the impacts of aviation should be treated as a priority by those interested in averting climate change, and that the scale of reduction needed can only be achieved through demand restraint i.e. discouraging people from flying. Economic policy potentially has a key role to play in this process. The UK Government has the power to introduce a number of economic measures to complement the EU Emissions Trading Scheme, and these measures probably offer the best hope of starting to restrain demand in the immediate future.
Author(s): Gross, R., Heptonstall, P., Greenacre, P., Candelise, C., Jones, F. and Castillo Castillo, A.
Published: 2013
Publisher: UKERC
This report considers the role and importance of electricity cost estimates and the methodologies employed to forecast future costs. It examines the conceptual and empirical basis for the expectation that costs will reduce over time, explains the main cost forecasting methodologies, and analyses their strengths, limitations and difficulties. It considers six case study technologies in order to derive both technology specific and generic conclusions about the tools and techniques used to project future electricity generation costs.
Author(s): Anthony, P. and Lewis, M
Published: 2011
Publisher: ETI
Author(s): Wynn, S., Carter, R., Turner, C. and Huxley, C.
Published: 2016
Publisher: ETI
Author(s): UKERC
Published: 2006
Publisher: UKERC
The seminar was split into two parts, with the morning concentrating on future applications for hydrogen (the demand side) and the future economics of hydrogen infrastructure development (supply side). On the applications front, there were presentations from Dr Paul Harborne of the Cass Business School and Professor Paul Ekins of the Policy Studies Institute.
Author(s): Skea, J.
Published: 2007
Publisher: UKERC
Author(s): Blyth, W., Gross, R., Nash, S., Jansen, M., Rickman, J. and Bell, K.
Published: 2021
Publisher: UKERC
Author(s): Allan, G., Barkoumas, C., Ross, A. and Sinha, A.
Published: 2020
Publisher: UKERC
In this working paper, we look at the economic, energy, and emissions consequences for the UK of non-energy or invisible energy policies (Cox et al, 2019). These are policies which, while not explicitly energy-focused, impact on energy use and emissions. We examine this from a sectoral perspective, looking at differences in consequences when policies are successful in raising exports for individual sectors of the UK economy.
The central purpose of this paper is to extend that previous work and reflect the detailed industrial focus of the UK Government's Sector Deals' by looking below the aggregate level. We wish to focus on the incremental changes in economic activity, territorial industrial emissions and energy use (as well as the indicators of emissions- and energy-intensity of GDP) that could arise from success in increasing exports in specific industrial sectors. The opportunities and challenges for the UK to benefit at a sectoral level from international activity in low carbon sectors is the focus of work by Carvalho and Fankhauser (2017). That work does not however examine the consequences of achieving export growth at the sectoral level, or the quantitative scale of such impacts, or any trade-off's between successes in different low carbon sectors.
By looking these factors we can identify whether it may be possible to target export policies at specific sectors to stimulate greener growth, i.e. positive impacts on economic indicators with (desirable) reductions in energy use and/or emissions. While we might expect that such sectors could include those with lower energy and emissions per unit of output, or smaller links to energy-using sectors, the full (economic and environmental) system-wide consequences of increasing exports at the sectoral level can be examined using an appropriately detailed CGE model of the UK. Specifically, we are interested in the following question: are there differences in the consequences for economic, energy and emissions indicators when policies are successful in raising exports for individual sectors of the UK economy?
Author(s): Froggatt, A., Wright, G. and Lockwood, M
Published: 2017
Publisher: Chatham House, the Royal Institute of International Affairs
• Negotiations over the terms of ‘Brexit’ are likely to be lengthy, complex and difficult. Energy is one policy area in which it may be easier for the UK and future EU27 to find common ground
• Energy cooperation over the past decades has helped European countries to enhance their geopolitical security, respond to growing climate threats, and create a competitive pan-European energy market. Maintaining close cooperation in this field, and the UK’s integration in the European internal energy market (IEM), will be important for the UK and the EU27 post-Brexit.
• Strong UK–EU27 energy cooperation could help ensure that existing and future interconnectors – physical pipes and cables that transfer energy across borders – between the UK, Ireland and the continent are used as efficiently as possible. As European economies, including the UK, look to decarbonize further, interconnectors will help minimize the costs of operating low-carbon electricity systems, and help lower electricity prices for UK consumers.
• The UK and the EU27 have identified the special relations between the UK and the Republic of Ireland as a priority for negotiations. Any future agreement needs to maintain the Single Electricity Market (SEM) across the island of Ireland, as failure to do so could result in an expensive duplication of infrastructure and governance.
• EU funds and European Investment Bank (EIB) loans account for around £2.5 billion of the UK’s energy-related infrastructure, climate change mitigation, and research and development (R&D) funding per year. Replacing these sources of finance will be necessary to ensure that the UK’s energy sector remains competitive and innovative.
• The UK intends to leave Euratom, the treaty which established the European Atomic Energy Community and which governs the EU’s nuclear industry. This process – dubbed ‘Brexatom’ – will have a significant impact on the functioning of the UK’s nuclear industry, particularly in respect to nuclear material safeguards, safety, supply, movement across borders and R&D. Achieving this within the two-year Brexit time frame will be extremely difficult. The UK will need to establish a framework that it can fall back on to ensure nuclear safety and security.
• Remaining fully integrated with the IEM would require the UK’s compliance with current and future EU energy market rules, as well with some EU environmental legislation. The UK government, British companies and other relevant stakeholders will need to maintain an active presence in Brussels and European energy forums, so that constructive and informed engagement can be sustained.
• Without a willingness to abide by the jurisdiction of the European Court of Justice (ECJ), and in the absence of a new joint UK–EU compliance mechanism, the UK may be required to leave the EU Emissions Trading System (ETS) – an instrument in the UK’s and EU’s fight against climate change. Leaving the ETS would be complicated, even more so if the UK leaves before the end of the ETS’s current phase (2013–20). To maintain carbon pricing in some form outside of the ETS, the UK would need to either establish its own emissions trading scheme, which would be complicated and time-consuming; or build on the carbon floor price and introduce a carbon tax. Either of these potential solutions would need political longevity to be effective.
• It is in both the UK’s and the EU27’s interests for the UK to continue to collaborate on energy policy with EU and non-EU member states. The best way to achieve this would be to establish a robust new pan-European energy partnership: an enlarged European Energy Union. In particular, such a partnership could offer a useful platform for aligning EU policies with those of third countries, including the UK, Norway and Switzerland, while allowing them to fully access the IEM and push forward common initiatives. Experience suggests that the EU27 would be more receptive to working within an existing framework or multilateral approach (as with the European Energy Community) than to adopting a bilateral approach (as the EU currently does in its energy relations with Switzerland).
Author(s): Snell, C. and Bevan, M.
Published: 2018
Publisher: UKERC
Too often fuel poverty is thought of as an issue that only impacts older disabled people, but the reality is that fuel poverty blights the lives of disabled people of any age: from children, to adults of working age, to older people.
The evidence gathered through the Policy Pathways to Justice in Energy Efficiency project is based on in-depth research conducted with national policy makers, with stakeholders who implement energy efficiency policy and with households on low incomes. It provides a clear picture of the energy needs of families on low incomes and of what needs to happen to make a real difference in their lives.
This guide for practitioners takes these findings and turns them into practical steps for people working in the fuel poverty and energy efficiency sectors supporting disabled people.
Author(s): Snell, C. and Bevan, M.
Published: 2018
Publisher: UKERC
Fuel poverty remains a pressing issue for over 4 million households in the UK today. Families with children living on low incomes are at particular risk of experiencing fuel poverty, and its effects can penetrate deep into everyday life and into the practical, social and emotional worlds of those who encounter it.
The evidence gathered through the Policy Pathways to Justice in Energy Efficiency project is based on in-depth research conducted with national policy makers, with stakeholders who implement energy efficiency policy and with households on low incomes. It provides a clear picture of the energy needs of families on low incomes and of what needs to happen to make a real difference in their lives.
This guide for practitioners takes these findings and turns them into practical steps for people working in the fuel poverty and energy efficiency sectors.
Author(s): Witham, H.
Published: 2006
Publisher: UKERC
This was a participatory workshop to share ideas for the innovative use of current energy events in the teaching of energy and transport economics. There were no formal speakers, as participants were given the space, time and 'infrastructure' (i.e. activities and set-up) for networking and sharing. Two weeks before the event, registered participants were asked to answer some questions about their teaching interests, strengths and concerns e.g. approaches to teaching, difficult topics and teaching resources. The responses were used to shape the agenda for the day.
The impetus for this unusual format was that participants of more traditional seminars/workshops/conferences lament the lack of time for networking and sharing. This workshop aimed to remedy that by making those aspects the focus.
Author(s): Baker, P., Mitchell, C. and Woodman, B.
Published: 2009
Publisher: UKERC
The objective of this report is to review aspects of existing regulation, electricity market arrangements and industry practice in order to identify barriers in making the transition to a sustainable network.
Author(s): Barker, Terry and Foxon, Tim
Published: 2008
Publisher: UKERC
The study examines the macroeconomic rebound effect for the UK economy, arising from UK energy efficiency policies and programmes for 2000-2010. The work explores the relationships between energy efficiency, energy consumption, economic growth and policy interventions using a well-established and highly detailed macroeconomic model of the UK economy. The work has been carried out in response to a call from the UK Department for Environment, Food and Rural Affairs (Defra), with the support of Defra’s energy-efficiency policy team. As the focus of this study is to assess the magnitude of the macroeconomic rebound effect, the projections given in the report should not be taken as forecasts of future UK economic or environmental performance, e.g. the projections given here will differ from those in the 2006 Climate Change Programme.
Author(s): Sorrell, S.
Published: 2007
Publisher: UKERC
This report analyses the nature, operation and importance of rebound effects and provides a comprehensive review of the available evidence on this topic, together with closely related issues, such as the link between energy consumption and economic growth. It assesses the strengths and weaknesses of the evidence base, clarifies the underlying disputes and highlights the implications for energy and climate policy. The key message is that promoting energy efficiency remains an effective way of reducing energy consumption and carbon emissions. But more explicit treatment of rebound effects is needed to assess the contribution that energy efficiency can realistically make.
Author(s): Dimitriopolous, J. and Sorrell, S.
Published: 2006
Publisher: UKERC
The rebound effect results in part from an increased consumption of energy services following an improvement in the technical efficiency of delivering those services. This increased consumption offsets the energy savings that may otherwise be achieved and potentially undermines the rationale for policy measures to encourage energy efficiency.
The nature, definition and magnitude of the rebound effect are the focus of longrunning disputes with energy economics. This paper brings together previous theoretical work to provide a rigorous definition of the rebound effect, clarify key conceptual issues and highlight the consequences of various assumptions for empirical estimates of the effect. The focus is on the direct rebound effect for a single energy service - indirect and economy-wide rebound effects are not discussed.
Beginning with Khazzoom’s original definition of the rebound effect, we expose the limitations of three simplifying assumptions on which this definition is based.
First, we argue that capital costs form an important part of the total cost of providing energy services and that the higher cost of energy efficient conversion devices will reduce the magnitude of the rebound effect in many instances.
Second, we argue that energy efficiency should be treated as an endogenous variable and that empirical estimates of the rebound effect may need to apply a simultaneous equation model to capture the joint determination of key variables.
Third, we explore the implications of the opportunity costs of time in the production of energy services and highlight the consequences for energy use of improved ‘time efficiency’, the influence of time costs on the rebound effect and the existence of a parallel rebound effect with respect to time.
Each of these considerations serves to highlight the difficulties in obtaining reliable estimates of the rebound effect and the different factors that need to be controlled for. We discuss the implications of these findings for econometric studies and argue that several existing studies may overestimate the magnitude of the effect.
Author(s): Carlo, D. and Keay-Bright, S.
Published: 2007
Publisher: UKERC
This workshop set out to address four key questions, a) to d), identified prior to the event. Experts were invited to tackle these questions through means of a preworkshop briefing paper. These papers were circulated to participants in advance of the workshop. The authors presented a brief summary of their paper during the workshop and participants were invited to discuss the issues raised by the paper and any other related issues. The briefing papers are available in the Appendices of the full report, which can be downloaded from the UKERC website.
Author(s): Heptonstall, P., Gross, R. and Steiner, F.
Published: 2017
Publisher: UKERC
When the UKERC TPA team completed its first assessment of the evidence on the costs and impacts of intermittent generation on the British electricity system, the conclusion was that the additional costs would be relatively low, adding around 5-8 per MWh to the cost of the renewable electricity generated. This was based on a review of the available evidence, most of which did not envisage more than 20% of electricity to be sourced from intermittent renewables.
Since then, the UKs targets for renewable generation have been set considerably higher than this, and a number of significant new studies have been carried out into the likely effects of a much higher proportion of renewable electricity in the UK mix.
This project provides an update to the original 2006 UKERC report, reviewing the new evidence for the impacts associated with higher shares ofrenewable generation and
Author(s): Allan, G., Barrett, J., Brockway, P., Sakai, M., Hardt, L., McGregor, P.G., Ross, A.G., Roy, G., Swales, K. and Turner, K.
Published: 2019
Publisher: UKERC
This study investigates how an increase in exports (a key pillar in the UK Industrial Strategy) could impact energy and industrial policy by comparing two types of energy-economy models.
Achieving the targets for reducing greenhouse gas emissions set out in the UK Climate Change Act will require a significant transformation in the UK's energy system.
At the same time, the government is pursuing a new UK Industrial Strategy, which aims to improve labour productivity, create high-quality jobs and boost exports across the UK.
The economic and the energy systems in the UK are tightly linked and so policies adopted in one area will produce spillover effects to the other.
To achieve the objectives set out in the two strategies it is therefore vital to understand how the policies in the energy system will affect economic development and vice versa.
Our study contributes to this by investigating how an increase in exports (a key pillar in the UK Industrial Strategy) could impact energy and industrial policy.
We address this question by systematically comparing the results of two types of energy-economy models of the UK, a computable general equilibrium model (CGE) and a macroeconometric (ME) model.
In both models we analyse a stimulus to demand from an increase in exports arising from a successful export strategy as motivated by the UK Industrial Strategy.
The qualitative results of the export stimulus are similar across all models in that GDP and employment are always stimulated. In this sense, the results are reassuring for the UK’s Industrial Strategy that emphasises export promotion.
However, the models also find that total energy use and CO2 emissions increase, and so does the energy intensity and emissions intensity of GDP.
The increase in CO2 emissions occur because the study identifies the energy and CO2 impacts of an export shock with other things remaining unchanged. Therefore the models do not simultaneously incorporate the UK carbon budgets or policies to support energy efficiency and decarbonisation of energy supplies.
However, our analysis reveals the likely adjustment of energy and climate policies to counteract the increase in CO2 and energy intensity that may result from export promotion. It therefore emphasises the need to complement UK industrial policies with appropriate action on energy use and carbon emissions to meet statutory carbon targets set by the Climate Change Act (2008).
The results highlight the interdependence of the energy and economic systems. They show that there are benefits to coordinating strategic initiatives aimed at stimulating economic activity with those aimed at tackling carbon emissions, as envisaged in the UK’s Clean Growth Strategy.
Author(s): Ross, A.G., Allan, G., Figus,G., McGregor, P.G., Roy, G., Swales, J.K. and Turner, K.
Published: 2018
Publisher: UKERC
The wider impacts of energy policy on the macro-economy are increasingly recognised in the academic and policy-oriented literatures. Additionally, the interdependence of energy and economy implies that a (policy) change in the non-energy system impacts on the energy system. However, such spillovers on the energy system have not been extensively researched. We begin by analysing the impacts of export promotion policies - a key element of the UKs Industrial Strategy - on the energy system and energy policy goals. As the impacts of such policies are, in large part, transmitted via their effects on the economy, we adopt a computable general equilibrium model - UK-ENVI - that fully captures such interdependence. Our results suggest that an across-the-board stimulus to exports increases total energy use significantly. This does not come directly through energy exports, but indirectly through the energy sectors linkages to other sectors. Export led growth therefore impacts on energy use - and significantly so. This in turn is likely to have an adverse impact on emission targets. Policy makers should be aware of the fact that a successful implementation of the Industrial Strategy may create significant tensions with the UKs Clean Growth Strategy, for example, and with the goals of energy policy more generally. The importance of this effect will in practice depend upon: the mix of goods and services that are exported (an issue that we shall address once the export strategy is published); the success of low-carbon policies. Ultimately, a knowledge of the nature and scale of these spillover effects of economic policies on the energy system creates the potential for more effective and efficient policy making
Author(s): Katris, A., Turner, K., McEwen, N., Munro, F., Cairney, P. and McHarg, A.
Published: 2020
Publisher: UKERC
Energy Efficient Scotland (EES) is a large scale energy efficiency improvement programme to be implemented in Scotland. Over a 20-year period, currently scheduled to start in 2020, an amount in excess of 10billion is planned to be directed to the improvement of the energy efficiency in domestic and non-domestic buildings.
Funding for energy efficiency projects will come not only from the Scottish Government but also private interest-free and low interest loans as well as the successor(s) to the Energy Company Obligation (ECO). Aside from directing investment funds to the Scottish economy, promotion and support of energy efficiency through programmes such as EES, is one of the few instruments at the Scottish Governments disposal to conduct energy policy, especially on the energy demand side.
EES was officially announced in May 2018 with the publication of the EES Route Map. At that time the UK was already in the process of leaving the European Union: commonly referred to as Brexit.
Brexit, regardless of its final shape (which is currently unknown), is expected to affect policies in multiple ways including limitations to EU funds, skilled labour movement restrictions and increased import prices to name a few examples (among the potential impacts highlighted by different studies, reported in a 2018 Institute for Government report ). The magnitude and the exact nature of any impacts will be affected by the exact form that Brexit will have. In this shifting socio-economic landscape, EES will undoubtedly be affected in a range of ways.
In this working paper,we explore the funding limitations that Brexit could introduce to EES. Specifically, we identify two EES funding mechanisms that are likely to be affected; government-issued grants and privately-provided loans. For different reasons, these mechanisms are of paramount importance in order to achieve the EES goals as specified in the EES Route Map.
Author(s): Frontier Economics
Published: 2018
Publisher: ETI
Author(s): Durham, S.
Published: 2017
Publisher: ETI
Author(s): Blyth, W., Gross, R., Jansen, M., Rickman, J., MacIver, C. and Bell, K.
Published: 2023
Publisher: UKERC
This working paper is an update to our November 2021 briefing paper: Risk and investment in zero-carbon electricity markets.
Author(s): Blyth, W., McCarthy, R. and Gross, R.
Published: 2014
Publisher: UKERC
The electricity sector faces a level of investment in the coming two decades far higher than the past two decades. It needs to renew its ageing generation fleet, and shift towards capital-intensive low-carbon forms of generation. Over the past few years, various organisations and commentators have suggested that the sector may be unable to deliver, questioning whether there will be a sufficient flow of money into the sector to finance these investments.
This report examines the evidence for these claims, looking at three key issues:
Author(s): Sorrell, S. and Dimitropoulos, J.
Published: 2007
Publisher: UKERC
One interpretation of the so-called Khazzoom-Brookes postulate is that all costeffective energy efficiency improvements will increase energy consumption above where it would be without those improvements. This is a counterintuitive claim for many people and requires strong supporting evidence if it is to gain widespread acceptance. The main conclusion from this review is that such evidence does not exist.
Author(s): Sorrell, S.
Published: 2007
Publisher: UKERC
The aim of this Supplementary Note is to provide a graphical analysis of rebound effects and in particular to clarify the distinction between income and substitution effects for consumers and output and substitution effects for producers. This permits a clearer understanding of how rebound effects operate. The analysis draws upon standard neoclassical theory and is informed in particular by the insightful discussions of the rebound effect by Berkhout et al (2000) and Binswanger (2001).
Author(s): Sorrell, S. and Dimitropoulos, J.
Published: 2007
Publisher: UKERC
This report examines the evidence for direct rebound effects that is available from studies that use econometric techniques to analyse secondary data. The focus throughout is on consumer energy services, since this is where the bulk of the evidence lies. The evidence relevant to direct rebound effects for producers is discussed separately in Technical Reports 3, 4 and 5.
This report clarifies the theoretical and methodological issues associated with such estimates, highlights the strengths and limitations of different approaches and summarises the available evidence for direct rebound effects for consumer energy services, paying particular attention to personal automotive transportation.
Author(s): Broadstock, D., Hunt, L. and Sorrell, S.
Published: 2007
Publisher: UKERC
The elasticity of substitution between energy and other inputs is also a crucial variable for Computable General Equilibrium (CGE) models of the macro-economy. The assumptions made for this variable can have a major influence on model results in general and estimates of the rebound effect in particular.
These observations suggest that a closer examination of the nature, determinants and typical values of elasticities of substitution between energy and other inputs could provide some useful insights into the likely magnitude of rebound effects in different sectors. This was the motivation for this report, which includes an in-depth examination of empirical estimates of the elasticity of substitution between energy and capital. However, the empirical literature on this subject is confusing and contradictory and more than three decades of empirical research has failed to reach ac
Author(s): Castillo-Castillo, A.
Published: 2012
Publisher: UKERC
This case study examines Combined Cycle Gas Turbine (CCGT) cost forecasts as well as coeval cost estimates and their underlying methodologies. It was prepared as part of a series of case studies designed to inform the UKERC TPA report ‘Presenting the Future: An assessment of future cost estimation methodologies in the electricity generation sector.’
The study is the result of an extensive review of scientific journal articles as well as industry and government reports; it also draws on key insights from innovation theory. The presentation structure is aligned to the three aims of the study, namely:
Author(s): Jones, F.
Published: 2012
Publisher: UKERC
Global aspirations for carbon capture and storage (CCS) technologies are high. According to the International Energy Agency’s BLUE map scenario, achieving a 50% global greenhouse gas reduction by 2050 requires CCS-fitted plant to account for 17% of total electricity generation (IEA, 2009) 1. Yet, despite its central role in future energy scenarios, CCS is still yet to be demonstrated at utility scale. This means that CCS cost estimates are not informed by practical experience of building commercial-scale plant.
With high aspirations present and utility-scale empirical data absent, CCS technologies provide an interesting case study for analysing cost estimation methodologies. As such, this Working Paper examines global trends in current and future projections of CCS costs in the power sector, aiming to:
A systematic literature review was conducted as a basis for analysing CCS cost estimates, with approximately fifty relevant academic articles and grey literature reports being identified (as detailed in the Appendix). The focus for analysis was estimates of levelised and capex costs for CCS. It is recognised that the decision to analyse these cost metrics – instead of CO2 avoidance costs – has implications for the relative attractiveness of coal CCS and gas CCS technologies. However, these metrics bring the benefit of enabling the comparison of CCS with other power sector technologies analysed in this Working Paper series (UKERC, 2011).
The paper begins by considering trends in current cost estimates for CCS (Section 2), and then progresses to examining future projections (Section 3). Following this, implications for CCS cost estimation methodologies are identified (Section 4).
Author(s): Greenacre, P.
Published: 2012
Publisher: UKERC
This paper examines global cost trends in nuclear energy, both in terms of historical contemporary costs and also historical forecasts of future costs. The rationale for the study is to support and inform the UKERC TPA report ‘Presenting the Future: An assessment of future cost estimation methodologies in the electricity generation sector’. Approximately 75 academic articles and grey literature reports have been reviewed for this case study, both for data gathering and analysis purposes, in order to achieve three specific aims:
Author(s): Greenacre, P.
Published: 2012
Publisher: UKERC
Offshore wind is widely expected to play a major role in UK compliance with the EU Renewables Directive. Projections from a range of analysts suggest the UK may need at least 15 to 20 GW of offshore wind capacity by 2020 (HoL, 2008) . Though the government has not set a specific target, the central range in its Renewable Energy Roadmap is that up to 18 GW could be installed by 2020 (DECC, 2011) with aspirations to go well beyond that in the decades that follow.
Development rights in the UK have been awarded by the Crown Estate (the owner of the seabed) in 4 rounds to date. Rounds 1 and 2, which commenced in 2001 and 2003 respectively, granted rights for a total of circa 8 GW of development. Round 2.5 gave Round 2 developers the rights to an additional 1.5 GW, whilst Round 3 rights, awarded in 2010, were for over 30 GW of potential development (The Crown Estate, 2010a, The Crown Estate, 2010b, Douglas-Westwood, 2010).
Given the substantial ambitions for UK offshore wind deployment the issue of cost and cost reduction has therefore been the subject of considerable interest. Drawing heavily on the data and analyses of UKERC TPA’s 2010 report (Greenacre et al., 2010), this paper examines cost trends in offshore wind energy, comparing past forecasts with outcomes to date, and analysing the main reasons for the disparity between them. The rationale for the study is to support and inform Chapter 5 of the UKERC TPA report ‘Presenting the Future: An assessment of future cost estimation methodologies in the electricity generation sector’. The case study has three specific aims:
Author(s): Jones, F.
Published: 2012
Publisher: UKERC
By 2020, it is projected that there will be 170GW of onshore wind capacity in the European Union, and 120GW in China (IEA, 2011), whilst America is expected to deliver 12GW of wind per year on average within this decade (Emerging Energy Research, 2009). Meanwhile within the UK, the Department of Energy and Climate Change (DECC) envisages a total of 13GW of onshore wind capacity over the same timeframe (DECC, 2011) However, although not as expensive as its offshore counterpart, the cost-effectiveness of onshore wind has been challenged within the UK. In February 2012 over one hundred MPs wrote to the Prime Minister expressing their concern about the subsidies required to support the technology (Middleton, 2012).
This case study contributes to a UK Energy Research Centre (UKERC, 2011) project on electricity generation cost estimation methodologies by:
The analysis focuses on the capex costs and levelised cost of energy (LCOE) of onshore wind. The cost data was collected from over 40 sources from a range of countries, with full details found in the Appendix.
Author(s): Candelise, C.
Published: 2012
Publisher: UKERC
This working paper examines global and UK trends in cost trajectories of PV technologies, at module and system level, with the aim of:
Author(s): Eyre, N., Boardman, B., Bagdanavicius, A., Skea, J. and Hardy, J.
Published: 2010
Publisher: UKERC
The UK Energy Research Centre welcomes this opportunity to provide input to the to the DECC Consultation on the proposed RHI financial support scheme. The UKERC response addresses a number of the questions posed in the consultation document.
Author(s): Frontier Economics
Published: 2014
Publisher: ETI
Author(s): Eastlake, A. and Lidstone, L.
Published: 2017
Publisher: ETI
Author(s): Energy Systems Catapult
Published: 2018
Publisher: ETI
Author(s): Strachan, N. and Ozkan, N.
Published: 2005
Publisher: UKERC
This workshop brought together researchers working within the International Energy Agency’s ETSAP network of MARKAL model users, together with a broad range of practitioners from the UK energy modelling community.
This opportunity for the two modelling communities to learn from each other’s work was enabled by the UK hosting the regular ETSAP semi-annual meeting which discussed modelling issues related to the MARKAL / TIMES family of energy models on subsequent days. One of the purposes of the UKERC Meeting Place is to develop networking and collaboration between UK energy researchers and also with the wider network of international energy practitioners.
The costs and characteristics of future energy technologies and how quickly they penetrate markets is a fundamental driver in the evolution of energy systems. Future technology cost is critical in assessing the costs of energy policies, ranging from economic competitiveness, environmental protection and emission mitigation, security of supply and equitable access to energy services. In response, a major ongoing effort by the energy modelling community has sought to better understand and incorporate this key driver of technological change into their energy models.
The scope of the workshop was to:
Author(s): ETI
Published: 2016
Publisher: ETI
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