Economic and environmental implications of nodal, zonal and uniform marginal pricing of electricity : a case of Veitnam | |
| Author | Dao Hoang Duc |
| Call Number | AIT Thesis no.ET-09-08 |
| Subject(s) | Electricity--Economic aspects--Vietnam Electrcity--Environmental aspects--Vietnam |
| Note | A thesis submitted in partial fulfillment of the requirement for the degree of Master of Engineering in Energy |
| Publisher | Asian Institute of Technology |
| Abstract | This study analyzed the differences among nodal, uniform and zonal marginal price models under the objective of maximization of welfare and minimization of generation cost. It also analyzed the economic and environmental effects of carbon tax, energy tax and carbon dioxide reduction target on electricity market of 500kV grid in Vietnam in 2020 at weekend and working day in the rainy season. The electricity pricing model were coded in GAMs and solved with the standard MINOS solver. This study shows that as compared to nodal marginal price (NMP), welfare losses in uniform marginal price (UMP) are 1.77% and 1.74% whereas in zonal marginal price (ZMP) welfare losses are 0.77% and 0.79 % respectively at weekend and working day. Besides, electricity pricing under welfare maximization is more economically efficient than minimization of generation cost. This study also analyzed the implications of setting carbon dioxide reduction target on electricity market of 500kV grid in Vietnam. Three cases of emission reduction target were considered: (i) carbon dioxide reduction target of 10%. (ii) carbon dioxide reduction target of 20% (iii) and carbon dioxide reduction target of 30%. This study indicates that carbon dioxide reduction target reduced the environmental effects and bring benefit to generators but the total welfare of electricity decreased in this case. The more the carbon dioxide reduction target increases, the more the environmental effects and total welfare reduce and the more the profit of the generators increases. Besides, the key finding of this study is that imposing carbon tax on electricity market also reduced environmental effects and brings benefit for lower and non carbon fuel power plants while it caused to reduce total welfare and profit of high carbon fuel power plant. The carbon tax relevant to stabilization level in the atmosphere at 550 ppmv and 650 ppmv is taken from Edmonds (2006) was introduced in this study. With the increase in carbon tax, the environmental effects, welfare and profit of high carbon fuel power plant reduced more while profit of lower and non carbon fuel power plant increase more. In addition, this study estimated the environmental and economic effect of energy tax on electricity market. Two different energy tax rates were considered in this study, i,e., USO.5$/MBtu and US1$/MBTu. The results also show that with the increase in energy tax, the environmental effects, welfare and profit of fossil fuel power plant reduced more while the profit of non-fossil fuel power plant increased. |
| Year | 2009 |
| Type | Thesis |
| School | School of Environment, Resources, and Development (SERD) |
| Department | Department of Energy and Climate Change (Former title: Department of Energy, Environment, and Climate Change (DEECC)) |
| Academic Program/FoS | Energy Technology (ET) |
| Chairperson(s) | Shrestha, Ram M.; |
| Examination Committee(s) | Mithulananthan, Nadarajah;Wang, Yaw-Jeun; |
| Scholarship Donor(s) | Electricity of Vietnam; |
| Degree | Thesis (M.Eng.) - Asian Institute of Technology, 2009 |