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- Strategies to make renewable energy sources compatible with economic growthPublication . Afonso, Tiago Lopes; Marques, António Cardoso; Fuinhas, José AlbertoThis paper focuses on the relationship between economic activity, and renewable and non-renewable energy consumption for the set of countries with the largest usage of each energy source. The dominance of one type of energy source could raise an unintentional barrier to a strategy of energy mix diversification. A panel of 28 countries was studied, using annual data for the time span 1995e2013. The ARDL approach was used to capture the short- and long-run effects. The Driscoll-Kraay estimator was used to attain robust results given the presence of the phenomena of heteroscedasticity, contemporaneous correlation, first order autocorrelation and cross-sectional dependence. Results suggest that renewable energy has not contributed to economic growth, while non-renewable energy has contributed. This finding should be incorporated in the definition of energy strategies, specifically by making renewable energy compatible with economic growth.
- Interactions between electricity generation sources and economic activity in two Nord Pool systemsPublication . Afonso, Tiago Lopes; Marques, António Cardoso; Fuinhas, José Alberto; Saldanha, Marco Aurélio ManoThe interactions between electricity sources and industrial production in Estonia and Sweden are analysed based on monthly data. The availability of data defines the time spans from January 2010 to September 2015 for Sweden and from April 2010 to December 2014 for Estonia. These countries are particularly interesting to study because of their dissimilar generation mix. Estonia’s generation mix is based on oil shale, while Sweden’s is based on nuclear plants and hydroelectricity. In short, both countries’ energy mixes are based on endogenous natural resources. The ARDL model was applied, allowing the long-run and short-run effects to be captured. The results prove that economic growth is sustained by natural endogenous resources. Estonia should continue to improve the usage of renewable energies, using fossil sources in support, in order to reduce emissions and to meet international environmental commitments. Sweden should promote the efficient usage of various renewable sources.
- Energy transition and economic growth: Evidence from countries with barriers to deversification of their electricity mixPublication . Afonso, Tiago Jorge Lopes; Marques, António Manuel Cardoso; Fuinhas, José Alberto Serra Ferreira RodriguesIn the global context of energy transition, many countries are trying to reduce their greenhouse gas emissions. The diversification of the electricity mix has been achieved with the development of intermittent renewable generation sources. To improve the understanding of the transition from fossil sources to renewable sources, it is necessary to analyse the constraints and drivers of this transition. With this in mind, this thesis is aimed at empirically analysing the behaviour of the interacting of sources, considering the existence of dominant sources, and the market size, while taking into account the commitment to economic growth. This thesis consists of four essays. The first essay addresses the role of renewable energies in economic growth, considering the context of an innocent barrier to diversification. The dominance of a generation source in the electricity mix, such as the abundance of a natural resource or by strategic option, may obstruct the entry or development of new sources in the electricity mix. Using panel data estimators for an annual frequency, the results show empirical evidence for a negative relationship of renewable energies to economic growth. Countries with a dominant source have a comparative advantage, so they face a trade-off between continuing to produce using the dominant source, promoting economic growth, or introducing alternative sources that may compromise economic activity. An electricity market is an essential tool in the accommodation of renewables, it distributes the excesses, and imports the production deficit, depending on the market size. The market size is related, not only to the geographical extent, but also to the depth, integration of sources, electricity mix diversity of the members, and flows of electricity traded. Therefore, the market size may be a potential barrier to the development of renewables. The second essay analyses the interactions between electricity generation sources and economic activity in the context of a large electricity market. Using autoregressive distributed lag models in time series with monthly frequency for a sample of two countries in the Nord Pool Spot, the results show that endogenous natural resources are supporting economic activity. In the third essay, the interaction of electricity sources with the wholesale market price in a small market context is considered. Using a vector autoregressive model with daily frequency time series, the two members of the Iberian market were analysed. The results show that the two countries, Spain, and Portugal, do not interact with the market in the same way. The scale of electricity generation is very different in the two electrical systems. The establishment of admission criteria to an electricity market, such as the diversity of the mix in relation to existing members, is recommended. Diversification of an electricity mix can be used to reduce energy dependency and promote energy transition. The fourth essay addresses two concepts of energy transition, specifically clean energy transition and low carbon energy transition. Two indicators were computed and proposed to measure both transition approaches. In clean energy transition, renewables were considered as part of the transition, while in low carbon energy transition, both renewable and nuclear sources were considered as part of the energy transition. Some panel data estimators were applied in two sub-samples, non-nuclear and nuclear producers. Energy efficiency and trade openness as a supporter of energy transition are a common feature in both approaches. As such, energy efficiency promotion measures are necessary for the development of renewables.
- The Dynamics of the Italian electricity generation system: an empirical assessmentPublication . Afonso, Tiago Jorge Lopes; Marques, António Manuel CardosoEste trabalho analisa a forma como as fontes de geração de eletricidade interagem entre si, e destas com a atividade económica, em Itália. Este é um país que passou por um período de instabilidade económica e está muito dependente da importação de eletricidade e também de matérias-primas para a geração de eletricidade. Estes fatores tornam a análise da dinâmica de interação entre fontes em Itália particularmente relevante. Com base em dados com frequência mensal, recorre-se à abordagem ARDL. Esta abordagem permite uma análise mais alargada, aplicável a variáveis I(0) e I(1), bem como permite decompor os efeitos totais em efeitos de curto e de longo-prazo. Esta análise é complementada com a causalidade Toda-Yamamoto para analisar as relações causais. Os resultados da evidência empírica revelam coerência interna e confirmam o efeito de substituição entre fonte fóssil e hídrica. A geração a partir da fonte hídrica tem sinal positivo no curto-prazo e negativo no longo-prazo. Observou-se ainda a existência de causalidade bidirecional, no longo-prazo, entre atividade económica e fontes de geração renovável, isto é, a atividade económica incentiva a geração de renováveis, não se confirmando o reverso. Este resultado está de acordo com o facto de que a contribuição das renováveis resulta eminentemente dos objetivos traçados na União Europeia. Conclui-se ainda que a dependência de energia do exterior compromete a atividade económica em Itália. Assim, os decisores de política devem estimular a produção endógena de eletricidade. Os objetivos traçados pela União Europeia deveriam ter em conta o nível de riqueza dos países. Este trabalho contém ainda uma discussão aprofundada de políticas de energia para tornar mais flexível a acomodação das fontes geração dentro do sistema.
- Accommodating renewable energy sources in a small electricity market: An analysis considering the interactions of sources within Portugal and SpainPublication . Afonso, Tiago Lopes; Marques, António Cardoso; Fuinhas, José AlbertoThe Portuguese and the Spanish electricity generation systems are analysed in this paper. The Iberian market hasbeen isolated and has an increasing proportion of renewable sources. The main objective of this study is to un-derstand how electricity generation sources are interacting with electricity wholesale prices. The VAR approachwas used because of its high robustness to cope with the endogeneity detected by Granger block Exogeneity tests.To do this, workweek data recorded since the opening of the Iberian market (July 2, 2007) was used. Despite thegeographical proximity of the countries and their access to natural resources, the results provide empirical evi-dence of different modes of interaction in the market. This outcome could be due to the different sizes of thenational systems. The Portuguese electricity generating system does not have an extensive structure to share back-up with Spain via conventional sources. Spain's substantial generation structure could be used to provide inter-mittent back-up generation for Portugal. Considering the similar supply and demand patterns of the Iberiangeneration systems, their openness to the other markets with different consumption and generation patterns couldallow a more rational utilization of the renewables already deployed and, consequently, bring greater efficiency tothe Iberian electricity market.