Water, Wind, and Fire: The Cost of the Energy Transition

43 Pages Posted: 22 May 2024

See all articles by Rodrigo Moita

Rodrigo Moita

University of Sao Paulo

Daniel Monte

affiliation not provided to SSRN

Victor Orestes

affiliation not provided to SSRN

Abstract

We consider the energy transition in a tractable model of electricity markets that incorporates renewables with storage. Storage smooths costs over time and complements the intermittency of renewables. We calibrate our model to data from Uruguay, Brazil, and Argentina, countries with different capacity matrices and distinct natural characteristics. To approach zero emissions, their total energy costs must increase by at least 20\%, 40%, and 70%, respectively, from their current levels. We obtain a convex cost curve for reducing emissions, which is very steep as emissions get close to zero. Economically viable energy transition policies should focus on net-zero carbon emissions.

Keywords: Electricity markets, hydroelectric generation, intermittent sources, climate change

Suggested Citation

Moita, Rodrigo and Monte, Daniel and Orestes, Victor, Water, Wind, and Fire: The Cost of the Energy Transition. Available at SSRN: https://ssrn.com/abstract=4837160 or http://dx.doi.org/10.2139/ssrn.4837160

Rodrigo Moita (Contact Author)

University of Sao Paulo ( email )

Av. Prof. Luciano Gualberto, 908, sala 123a
São Paulo, 05508-010
Brazil
11982701989 (Phone)
05435-001 (Fax)

HOME PAGE: http://https://www.fea.usp.br/usuarios/docente/rodmoita

Daniel Monte

affiliation not provided to SSRN

Victor Orestes

affiliation not provided to SSRN

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