Dissertation_TAtkinson_Final_2020-07-17.pdf (1.66 MB)
Long-term infrastructure investment planning and policy analysis for the electricity sector in Small Island Developing States: Case for Jamaica
Energy sector transformation is of interest to policy makers and energy researchers.
Critical to this transformation is efficient (i.e. least-cost) infrastructure investment planning for
new generation and transmission infrastructure investments. Similarly, energy policies designed
to encourage low carbon electricity generation have fueled much of the transformation globally
over the past two decades. However, knowledge gaps remain with respect to the unique economic
and geographic features of Small Island Developing States (SIDS); recommendations from
previous studies often have limited applicability to the SIDS context. This dissertation addresses
these concerns, contributing to our understanding of least-cost planning methods for new
infrastructure investments as well as energy policies appropriate for small, isolated and often
heavily indebted nations. The island of Jamaica is used as a case study to gain insights more
applicable to the broader SIDS context.
The first problem this dissertation addresses is the impact of simultaneously planning for
generation and transmission infrastructure instead of sequentially optimizing these decisions, as is
commonly done. Energy infrastructure planning in SIDS treats transmission infrastructure as an
afterthought once generation investments have been determined, potentially leading to sub-optimal
investments. Using a dynamic optimization model of generation and transmission infrastructure,
we find that it is more cost effective to co-optimize generation and transmission investments. The
substitutability between local generation and remote generation, facilitated by transmission
infrastructure, underpins this result.
The second empirical problem we address is the impact of loop flow on optimal
infrastructure investment decisions. The Energy Information Agency (EIA) defines loop flow as
“the movement of electric power from generator to load by dividing along multiple parallel paths;
it especially refers to power flow along an unintended path that loops away from the most direct
geographic path or contract path” (EIA, n.d.). We find no evidence that loop flow affects optimal
investment decisions in Jamaica. We attribute this to an abundance of transmission capacity and
the relative simplicity of Jamaica’s network design. Results may differ for other SIDS with
different starting configurations.
The third problem this dissertation addresses centers on energy policy. We quantify the
cost to the Jamaican society under four different policy scenarios: a renewable portfolio standard (RPS) of 30% by year 2030, a carbon tax, a production tax credit and an investment subsidy for
specific renewable energy resources (solar and wind). We find that if the decision makers’ primary
concern is reducing carbon emissions, a carbon tax is the economically efficient choice (of the four
options); an RPS has the second-lowest cost to society. Assessing the tradeoffs associated with
each option, a carbon tax is efficient but increases the average annual cost of electricity. If,
however, the decision makers’ primary objective is energy independence and not carbon emissions
reduction, then the RPS may be a better alternative than a carbon tax.
Collectively, this dissertation demonstrates a method for improving long-term planning in
the electricity sector in SIDS. It also quantifies the cost to society of implementing a menu of
carbon mitigating policies, removing the ambiguity that persists in energy policy setting. Not only
does this dissertation advance the energy economic literature by specifically addressing the
economic and geographic features of SIDS, but we make our data and program files freely
accessible. This is one measure that helps to overcome the data limitation hurdle that is a main
contributor to the dearth of energy economics research more applicable to SIDS.
History
Degree Type
- Doctor of Philosophy
Department
- Agricultural Economics
Campus location
- West Lafayette
