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Publication Detail
Critical mid-term uncertainties in long-term decarbonisation pathways
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Publication Type:Journal article
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Publication Sub Type:Journal Article
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Authors:Usher W, Strachan N
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Publication date:01/02/2012
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Pagination:433, 444
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Journal:Energy Policy
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Volume:41
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Status:Published
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Print ISSN:0301-4215
Abstract
Over the next decade, large energy investments are required in the UK to meet growing energy service demands and legally binding emission targets under a pioneering policy agenda. These are necessary despite deep mid-term (2025-2030) uncertainties over which national policy makers have little control. We investigate the effect of two critical mid-term uncertainties on optimal near-term investment decisions using a two-stage stochastic energy system model. The results show that where future fossil fuel prices are uncertain: (i) the near term hedging strategy to 2030 differs from any one deterministic fuel price scenario and is structurally dissimilar to a simple 'average' of the deterministic scenarios, and (ii) multiple recourse strategies from 2030 are perturbed by path dependencies caused by hedging investments. Evaluating the uncertainty under a decarbonisation agenda shows that fossil fuel price uncertainty is very expensive at around £20 billion. The addition of novel mitigation options reduces the value of fossil fuel price uncertainty to £11 billion. Uncertain biomass import availability shows a much lower value of uncertainty at £300 million. This paper reveals the complex relationship between the flexibility of the energy system and mitigating the costs of uncertainty due to the path-dependencies caused by the long-life times of both infrastructures and generation technologies. © 2011 Elsevier Ltd.
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