Question 1 (15 marks)

Consider an electricity market where the base of the demand curve is vertical and varies linearly between 2000MW and 8000MW (so is equally likely to be found anywhere in that range). If demand and supply don’t intersect the system operator sets the price to be VOLL=\$1,000.

Technology

FC per MWh Variable costs per MWh Carbon Emissions

in tonnes per MW Peak \$15 \$200 30

(a) Write the formula d(s) for the demand duration curve for demand curve assuming no outage hours. (1 mark)

(b) What is the duration needed for a price spike of \$1,000 for the peak plant to just cover its costs (2 marks)?

(b) What is the optimal amount of base load plant that should be built? (2 marks)

(c) What is optimal amount of mid load capacity? (2 marks)

(d) Find how much total capacity should be built and hence peak capacity? (2 mark)

(e) Draw the demand duration curve (1 mark).

(f) Draw the competitive supply curve (1 mark).

(f) Draw the price duration curve (1 marks).

(g) Show all plants just cover costs (3 marks).

Question 2 (10 marks)(a) Suppose now the government imposes a tax of \$10 a tonne and that capacity does not adjust. What is the average capacity factor of the peak and mid-merit plants?

What are the carbon emissions on average per hour? How much does the average price increase? (5 marks)

(b) Find the optimal capacity mix supposing that capacity mix adjusts in the long run to the tax.

What is the average price now? What are carbon emissions now? (5 marks)

Question 3 (15 marks)

(a) Suppose there are three sectors in the NZ economy –transport, electricity and agriculture.

The marginal abatement cure for agriculture is MACA =25XA , for transport MACT=12XT and for electricity it is MACE=5XE. Initial emissions for electricity are 8 Mt, for transport 24Mt and for agriculture they are 28Mt. Total emissions are 60Mt.

(i)Derive and draw the economy wide marginal abatement curve. [hint. remember the most any sector can abate emissions is up to total initial emissions]. Note points of interest on your graph. (5 marks)

(ii) What carbon tax would be needed to ensure a 50% reduction in emissions? (2 marks)

(iii) What is the abatement for each sector to achieve the 50% reduction in emissions, (2 marks)

(iv) Calculate total costs. (2 marks)

(v) Suppose the government decided not to include agriculture (so no carbon tax on agriculture is imposed). Calculate the tax needed for the two remaining sectors to achieve 50% reduction (30Mt) and total costs now as well as the abatement for each sector. (2 marks)

(vi) What is the difference in total costs between (iv) and (v). Comment. (2 marks) EasyDue™ 支持PayPal, AliPay, WechatPay, Taobao等各种付款方式!

E-mail: easydue@outlook.com  微信:easydue

EasyDue™是一个服务全球中国留学生的专业代写公司