The Social Cost of Electricity

The Social Cost of Electricity

Scenarios and Policy Implications

The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Anil Markandya, Andrea Bigano and Roberto Porchia

This book reports and rationalizes the state-of-the-art concerning the social costs of electricity generation. Social costs are assessed by adding to the private generation costs, the external costs associated with damages to human health, the environment, crops, materials, and those related to the consequences of climate change. The authors consider the evolution of these costs up to 2030 for major electricity generating technologies and, using these estimates, evaluate policy options for external cost internalization, providing quantitative scenarios by country and primary fuel for 2010, 2020 and 2030. While mainly focusing on European countries, the book also examines the situation in key emerging economies such as China, India, Brazil and Turkey.

Chapter 8: Electricity Scenarios in EU Countries

Houda Allal, Ole Løfsnes, Thomas Niesor, Matteo Urbani and Berit Tennbakk

Subjects: economics and finance, energy economics, environmental economics, environment, environmental economics


Houda Allal, Ole Løfsnes, Thomas Niesor, Berit Tennbakk and Matteo Urbani This chapter is divided into two parts. First, the commonly used models for the EU power sector are described and compared. Second, the ECON model’s assumptions and results are explained in detail. 8.1 EXISTING MODELS FOR EU COUNTRIES Energy models produce forecasts for the future global energy situation, especially in terms of energy demand, energy mix and security of supply. A range of organisations issue regular projections that serve a variety of political and economic purposes, and with different emphases and methodologies. This variety means that the forecasts are often difficult to compare. On the basis of selected parameters, the first part of this chapter compares the points of view of three well-established models regarding electricity sector scenarios for the EU251 (that is the current EU27, excluding Romania and Bulgaria). Models Descriptions PRIMES is a modelling system for energy supply and demand in the EU Member States up to 2030. The results of PRIMES are published in the European Energy and Transport Trends to 2030 (European Commission, 2005). Updated scenarios are expected to be released shortly. The EC DG-Research published the World Energy, Technology and Climate Policy Outlook (WETO) in 2003. The WETO presents results from the POLES model which is a world partial equilibrium simulation model for the energy sector, with endogenous international energy prices. The International Energy Agency (IEA) model uses its ‘World Energy Outlook’ to carry out long-term energy projections up to 2030. There is...

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