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Interfuel substitution in OECD‐European electricity production
Author(s) -
Moxnes Erling
Publication year - 1990
Publication title -
system dynamics review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.491
H-Index - 57
eISSN - 1099-1727
pISSN - 0883-7066
DOI - 10.1002/sdr.4260060104
Subject(s) - coal , econometrics , economics , substitution (logic) , electricity , a priori and a posteriori , investment (military) , production (economics) , fossil fuel , electricity demand , preference , sample (material) , electricity generation , microeconomics , power (physics) , engineering , computer science , thermodynamics , waste management , philosophy , physics , electrical engineering , epistemology , politics , law , political science , programming language
Fuel substitution in OECD‐European electricity production is described by a putty‐clay formulation. At the time of investment, fuel shares are determined according to a logit model. These fuel shares are maintained throughout the lifetime of the power plants. However, a significant share of capacity is assumed to be flexible. Short‐term fuel switching is described by a logit model. An attempt has been made to formulate the model such that all parameters have a real‐life interpetation. This enables the use of a priori data about all parameters. The model gives a very good fit to historical time series for oil, gas, and coal demand when fuel premiums are calibrated. The most striking finding is that there is a strong preference for the use of coal. Because of the a priori data, the model is not very sample‐dependent. Thus, it should be well suited for policy studies or for predictions. The model should be used with caution if very high fuel prices are expected.