Fuel choice in new fossil fuel electric power plants

Electric utilities, fuel use, and responsiveness to fuel prices

“…Early work in this area aggregated fuels as a single input (see Galatin (1968) for a summary of the development of the early literature in fuel switching and Atkinson et al (1976) for a discussion of the limitations of models that aggregate fuels as a single input). In the 1970s, researchers built in assumptions to allow cross-price elasticities of fuel demand and fuel substitution over the short run, via fuel switching (Atkinson and Halvorsen, 1976) or the long run, through investment in new boiler technology (Joskow and Mishkin, 1977;Seifi and McDonald, 1986). Aggregating to the regional level, Mountain (1982) and Uri (1977) combine short-run and long-run mechanisms showing substantial fuel substitution in the regional electricity supply.…”

“…Models allow for cross-price elasticities of fuel demand and fuel substitution over the short run, via fuel switching (Atkinson and Halvorsen, 1976) or the long run, through investment in new boiler technology (Joskow and Mishkin, 1977;Seifi and McDonald, 1986). Following Atkinson and Halvorsen (1976), we measure three separate inputs to electricity production (coal, oil, and natural gas) and consider fuel switching to be synonymous with fuel substitution -or a shift in the generation of electricity attributable to a particular factor input.…”

Co2 Abatement and Fuel Mix in German Electric Power Generation — Is the “Ecological Electricity Tax” Ecologically Effective?

“…There are also a number of micro econometric analyses of fuel mix decisions but almost all of these micro level studies use US electric utilities data (e.g. Atkinson & Halvorsen [1976], or Seifi & McDonald [1986]). Studies using non-US firm level data, such as Bousquet & Ivaldi [1998] are rather rare.…”

Firing the Furnace? - An Econometric Analysis of Utilities' Fuel Choice

“…Using aggregate data may not allow for modelling these complex decision problems at the micro-level; nevertheless, although micro-econometric analyses of fuel-mix decisions are not absent from the literature, almost all of these micro-level studies use data from US electric utilities, see e.g. Atkinson & Halvorsen (1976), and Seifi & McDonald (1986). Studies using non-US firm-level data, such as Bousquet & Ivaldi (1998), are rare in this field.…”