The economics of water resources for the generation of electricity and other uses

Abstract

An optimal control approach is used to analyze the tradeoff between the use of water resources for electricity generation versus other economic uses (irrigation, industry, etc.). For that purpose, a dynamic model is presented which establishes relationships between economic growth, water resources management, and energy policy in the context of the aforementioned tradeoff, in an economy whose energy matrix is heavily dependent upon hydroelectric power. Among other results, the analysis establishes that in the market, the price of water for non-energy uses should be twice the price of the energy goods, indicating the necessity of substituting other sources of energy for hydroelectric power.

Electric Power Industry: Operational and Public Policy Challenges and Opportunities

“…, Garc ıa-Gonz alez et al(2007),Latorre et al (2007), Kristoffersen (2008), Stamford Da Silva andCampello De Souza (2008),Azevedo et al (2009), De Ladurantaye et al (2009,Frangioni and Gentile (2009),Cerisola et al (2012),Guigues and Sagastiz abal (2012), Denault et al (2013),Densing (2013),Pritchard (2015),Ghaddar et al (2015),Vojvodic et al (2016Vojvodic et al ( ), S eguin et al (2017,Zephyr et al (2017),Carpentier et al (2018), andGauvin et al (2018) Wind and hydro coordinationBelanger and Gagnon (2002),Castronuovo and Lopes (2004),Jaramillo et al (2004),Bueno and Carta (2006),Benitez et al (2008),Vespucci et al (2012), L € ohndorf et al (2013), and Steffen and Weber (2016) Investment in hydropower assets Chaton and Doucet (2003), Thompson et al (2004), Bøckman et al (2008), and Bruno et al (2016) Open research questions Operational Policy How should wind and hydropower operations be coordinated? How does hydropower's new role of balancing the fluctuations in wind output interact with its other functions such as irrigation?…”

A strong argument for using non-commodities to generate electricity

“…Many other authors constructed models adding limited resources. For these models, consult (Heal, 1997), (Stamford da Silva, 2008), (Campello de Souza, 2005) and (Stamford da Silva & Campello de Souza, 2008).…”

“…-To elaborate and develop an economic growth model, with energy resources, based on the model by Stamford da Silva e Campello de Souza (2008), that can give support to decisions in planning for the electricity sector.…”

“…An economic growth model is presented which aims to support decisions by the planner when drafting a policy for expanding the electricity supply. The model is based on the economic growth model proposed by (Stamford da Silva & Campello de Souza, 2008) which just dealt with the trade-off between using water to generate energy and in production. Unlike that analysis, this paper studies not only the water sector but also the fossil fuel and biomass sectors because these resources have multiple uses, that is, analyses are made of the interaction between the energy sector's use of water, fossil fuels and biomass and the economy as a whole.…”

“…In the same way as(Stamford da Silva & Campello de Souza, 2008) are, the new model is deterministic, i.e, it does not address the random characteristics involved in the system, such as droughts or discoveries of new fields. In addition to that it does not analyze monetary matters; instead value relations are considered.…”