This book addresses the need of oil-importing countries to mitigate vulnerability to oil price volatility. It offers financial instruments to manage price risk, complemented by structural measures ...designed to reduce oil consumption.
Over the coming decades, the supply of electric power will need to expand to meet the growing demand for electricity, but how the production and use of electricity develops will have broad ...ramifications for the diverse economies and societies of Latin America and the Caribbean. This report discusses the critical issues for the power sector considering a baseline scenario to 2030 for countries and sub-regions. Among these critical issues are the demand for electricity, the total new supply of electric generating capacity needed, the technology and fuel mix of the generating capacity, and the CO2 emissions of the sector. Under modest GDP growth assumptions, the demand for electricity in Latin America and the Caribbean would more than double by 2030. The analysis suggests that under any economic scenario, it will be challenging for the Region to meet future electricity demand. The report shows that meeting the demand for electricity in Latin America and the Caribbean can be achieved by not only building new generating capacity by the expansion of hydropower and natural gas, but by relying on an increased supply of non-hydro renewables, expanding electricity trade, and making use of supply and demand-side energy efficiency to lower the overall demand for electricity. Some recommendations derived from the report are the need for strengthening regulations and market design of hydropower and gas power generation projects and the need to design supportive policies to develop renewable energy technologies and promote energy efficiency measures.The primary audience to which this report is addressed are policy makers, power sector planners and stakeholders.
Countries heavily dependent on imported oil to power a significant portion of their electricity generation are especially vulnerable to high and volatile oil prices. In net oil-importing countries ...worldwide, high and volatile oil prices ripple through the power sector to numerous segments of the economy. As prices move up and down, so does the cost of electricity production, which has far-reaching effects on the economy, fiscal and trade balances, businesses, and household living standards. High and volatile oil prices affect economies at both a macro and micro level. The major direct effects at the macro level are a deteriorating trade balance, through a higher import bill, reflecting a worsening in terms of trade; and a weakening fiscal balance due to greater government transfers and subsidies to insulate movements in international energy markets. At the micro level, investment uncertainty results from the higher risk of engaging in new projects and associated development and sunk costs, which, in turn, affects policy decisions and economic growth. This study responds to the needs of policy makers and energy planners in oil-importing countries to better manage exposure to oil price risk. The study's objective is threefold. First, it analyzes the economic effects of higher and volatile prices on oil-importing countries, with emphasis on the power sector, using examples from Latin America and the Caribbean (LAC). Second, it proposes a menu of complementary options that can be applied over multiple time frames. Several structural measures are designed to reduce oil generation and consumption, while a range of financial instruments are suggested for managing price risk in the short term. Finally, it attempts to quantify some of the macroeconomic and microeconomic benefits that could accrue from implementing such options. Tables, Figures, Appendixes, References.
The purpose of this work is to characterize both theoretically and empirically the cost structure of the Mexican gas transportation industry, and, based on this characterization, to propose pricing ...policies to improve the economic efficiency of the industry and give the appropriate signals to concerned economic agents. A production function for the process of gas transmission is considered, focusing on the two basic capital inputs to the process: pipe and compressors. Afterwards, a cost function is obtained. Due to the increasing returns to scale of the industry's production technology, long-run marginal cost is lower than the long-run average cost per unit. Therefore, using marginal-cost pricing would lead to a deficit for the firm. To deal with this problem, methods are proposed using the cooperative game theory approach to cost-based pricing. The different allocation methods are compared with respect to a set of desired properties using a normative economical criterion. It is shown that if several users agree to construct a pipeline and to allocate its costs such that the desired properties are satisfied, these properties will lead to an allocation based on the Shapley value and agents will have incentives to accept this scheme due to its properties of equity. Particular emphasis is also placed on the necessity of long-term contracts that allocate efficiently the inherent risks of an investment such as a pipeline. Finally, a model for allocating capacity over time is considered. The model proposed attempts to simulate the behavior of the agents who use a common facility during different periods of time, given that the capacity of the facility is constrained. The approach is to find optimal pricing so that social welfare is maximized while the common facility is efficiently used. If individuals have property rights to the capacity of the common facility, the result of the analysis shows the existence of market-clearing prices for the capacity of the pipeline for different periods of time.
Economic growth in the Latin America and the Caribbean region has picked up considerably during the past decade or so. This growth has been aided by widespread (earlier and more recent) investments ...in power generation, transmission, and distribution that increased the provision of electricity services to households, commerce, and industry. This report evaluates a number of critical issues for the power sector in the region in the coming two decades. These include the expected rates of increase in the demand for electricity, the required supply of new generating capacity, the technology and fuel mix of that generating capacity, and the carbon dioxide emissions of the sector. One of the key contributions of this study is the aggregation of individual country plans to the regional and sub regional levels, using a consistent set of data and a common methodology. The report also assesses the important roles of hydropower and natural gas, the way other clean and low-carbon resources can be expanded, the potential and benefits of greater electricity trade, and the role of energy efficiency. By considering the region as a whole, the report highlights the role that individual countries will play in shaping the region's aggregate power sector. Tables, Figures, Appendixes, References.
Executive Summary Andrés, Luis Alberto; Johnson, Todd M; Yépez-García, Rigoberto Ariel
Meeting the Balance of Electricity Supply and Demand in Latin America and the Caribbean,
2011
Book Chapter
Intro Andrés, Luis Alberto; Johnson, Todd M; Yépez-García, Rigoberto Ariel
Meeting the Balance of Electricity Supply and Demand in Latin America and the Caribbean,
2011
Book Chapter
