Energy & Environment Research Fraser of Allander Institute Department of Economics University of Strathclyde January 2011

Summary of Energy & Environment Research at the Fraser of Allander Institute We use a number of different analytical approaches to examine the relationships between economic activity and energy and environmental concerns. We consider issues ranging from the cost and impact of new renewable (including marine) electricity generation technologies, to the system-wide economic, energy and environmental impact of energy efficiency improvements.

SuperGen Marine Energy research In research funded by the EPSRC through the SuperGen Marine Energy Consortium, we have contributed to our understanding of: -The relationship between developments in the marine energy industry and wider economic activity in the UK -The role that marine technologies might play in providing electricity in the future -The appropriateness of current & proposed policy support mechanisms

Some key areas of research (1) Macroeconomic impacts on Scottish & UK economy of developments in the marine energy sector Impact of export demand for UK tidal devices Relationship between marine energy expenditures and regional employment We use multi-sector modelling approaches to consider the system-wide impacts of developments in the marine energy industry Input-output and social accounting matrix databases Computable general equilibrium modelling

Some key areas of research (2) We calculate the cost of wave and tidal energy provision Levelised costs and impact of ROC banding on “cost competitiveness” of renewables, including marine Wider social costs and benefits of marine energy Portfolio theory applications for wave and tidal energy in UK and Scotland We explore the construction of “efficient” portfolios of electricity generation And calculate the contribution that marine technologies might play within a broader portfolio of electricity generation (for example in reducing the ‘riskiness’ - in terms of cost variability - of the portfolio)

6 Some sample results: macro impacts We can: Quantify the macro- and sectoral distribution of impacts from marine energy developments on UK economy We identify domestic expenditures for given deployment timetables; estimate potential export revenues Potential export markets for UK-manufactured marine energy devices

7 Some sample results: levelised costs We have shown: The levelised costs of wave and tidal energies compared to other renewable and non- renewable technologies How the cost comparisons are affected by “banding” of Renewable Obligations Certificates

8 Some sample results: portfolio theory We can: Quantify contribution of wave and tidal technologies to reducing overall electricity portfolio cost variability Demonstrate that as we move from a portfolio mix with 0% tidal share to 10% tidal share we demonstrate that we can achieve a less ‘risky’ (in terms of cost variability) portfolio for a given cost p/kWh (see chart overleaf) Compare alternative ‘mixes’ of electricity generation types for Scotland to “efficient portfolios”

Some sample results: portfolio theory

10 Other energy-related work EPSRC SuperGen wind energy consortium – estimating the impact of developments in the offshore wind industry EU Biomara – exploring the impact of bio-marine energy Research on Sustainable Glasgow, funded by Glasgow City Council Scottish Government – study of the costs of reducing carbon emissions in Scotland EPSRC multiscale modelling to maximise demand side energy management

Selected Recent Publications ALLAN, G.J., BRYDEN, I., McGREGOR, P.G., SWALES, J.K., STALLARD, T., TURNER, K., AND WALLACE, R. (2008) “Concurrent and legacy economic and environmental impacts from establishing a marine energy sector in Scotland”, Energy Policy, Vol. 36, p ALLAN, G.J., EROMENKO, I., McGREGOR, P.G. & SWALES, J.K. (2011): “The Regional Electricity Generation Mix in Scotland: A Portfolio Selection Approach Incorporating Marine Technologies”, Energy Policy, Vol. 39, Issue 1, pp ALLAN, G.J., GILMARTIN, M., McGREGOR, P. & SWALES, J.K. (2011): “Levelised Costs of Wave and Tidal Energy: Current Cost Comparison and the Impact of ‘Banded’ Renewables Obligation Certificates”. In press, Energy Policy. Available online 08 October, 2010: DOI /J.ENPOL HALL, P., McGREGOR, P., & WILSON, G (2010): “Energy Storage in the UK Electrical Network: Estimation of the Scale and Review of Technology Options”, Energy Policy, Vol.38, Issue 8 (2010), pp McGREGOR, P.G., ALLAN, G., GILMARTIN, M., SWALES, J.K., AND TURNER, K. (2009): “The macroeconomics of energy efficiency: a theoretical analysis. In: International Handbook on the Economics of Energy. Edward Elgar, United Kingdom. ISBN McGREGOR, P.G., SWALES, J.K. AND TURNER, K. (2008): “The CO2 ‘trade balance’ between Scotland and the rest of the UK: Performing a multi-region environmental input-output analysis with limited data”, Ecological Economics, Vol. 66, Issue 4, July, pp