Papers by Reinhard Madlener
SSRN Electronic Journal, 2013
This paper investigates the economic feasibility of power-togas (P2G) systems and gas storage opt... more This paper investigates the economic feasibility of power-togas (P2G) systems and gas storage options for both H 2 and renewable methane. The study is based on a techno-economic model in which the net present value (NPV) method and Monte Carlo simulation of risks and price forward curves for the electricity and the gas market are used. We study three investment cases: a Base Case where the gas is directly sold in the market, a Storage & Arbitrage Case where temporal arbitrage opportunities between the electricity and the gas market are exploited, and a Storage & Balancing Case where the balancing markets (secondary reserve market for electricity, external balancing market for natural gas) are addressed. The optimal type and size of different centralized and decentralized storage facilities are determined and compared with each other. In a detailed sensitivity and cost analysis, we identify the key factors which could potentially improve the economic viability of the technological concepts assessed. We find that the P2G system used for bridging the balancing markets for power and gas cannot be operated profitably. For both, temporal arbitrage and balancing energy, pipe storage is preferred. Relatively high feed-in tariffs (100 € MW-1 for hydrogen, 130 € MW-1 for methane) are required to render pipe storage for P2G economically viable.
SSRN Electronic Journal, 2010
Insight into the homeowner's adoption decisions in favor of a specific innovative residential hea... more Insight into the homeowner's adoption decisions in favor of a specific innovative residential heating system (RHS) helps us to understand and assess the dynamics of the adoption and diffusion of such technological systems as a-social‖ phenomenon. This phenomenon emerges from the individual decisions of a set of heterogeneous actors on the market. In our research, we develop an integrated theoretical framework for assessing a homeowner's adoption decision in favor of a specific innovative RHS. Taking the theory of planned behavior (TPB) (Ajzen, 1991) and the perceived characteristics of innovations (PCI) (Moore and Benbasat, 1991) as a starting point, we propose a framework that explicitly accounts for external factors (esp. economic aspects) and personal-sphere determinants. This allows us to gain a deeper understanding of the role of a homeowner's personal-sphere as well as of the influence of perceived economic and other external factors on the RHS adoption process. We motivate our research with background on the case of Germany. Our theoretical framework can serve as a basis for empirically researching homeowners' adoption decisions in favor of a specific RHS and for developing a conceptual multi-agent simulation model for investigating the diffusion of RHS.
SSRN Electronic Journal, 2009
In this paper we study the relative advantage of investing in a natural gas combinedcycle (NGCC) ... more In this paper we study the relative advantage of investing in a natural gas combinedcycle (NGCC) power plant versus a coal-fired power plant with and without carbon capture and storage (CCS) technology. For the investment analysis under uncertainty, we apply fuzzy real options theory. Three different price scenarios for fuel input and CO 2 emission permits are taken into consideration. For the assumptions made, we find evidence that the NGCC and (to a lesser degree) the conventional hard coal-fired power plant are the most cost-effective options, followed by the two CCS technologies 'Oxyfuel' and 'Precombustion'. In contrast, due to high specific investment costs and significant losses in conversion efficiency, the third CCS option 'Post-combustion' remains uneconomical. The sensitivity analysis reveals that already at moderate cost reductions, 'Pre-combustion' and 'Oxyfuel' both become economically viable and, at sufficiently low CO 2 permit prices or interest rates, even the preferred options.
SSRN Electronic Journal, 2010
In a perfectly competitive market with a possibility of technological innovation we contrast guar... more In a perfectly competitive market with a possibility of technological innovation we contrast guaranteed feed-in tariffs for electricity from renewables and tradable green certificates from a dynamic efficiency and social welfare point of view. Specifically, we model decisions about the technological innovation with convex costs within the framework of a game-theoretic model, and discuss implications for optimal policy design under different assumptions regarding regulatory pre-commitment. We find that for the case of technological innovation with convex costs subsidy policies are preferable over quota-based policies. Further, in terms of dynamic efficiency, no pre-commitment policies are shown to be at least as good as the pre-commitment ones. Thus, a government with a preference for innovation being performed if the achievable cost reduction is high should be in favor of the no pre-commitment regime.
SSRN Electronic Journal, 2012
In this paper we investigate the economic viability of geothermal district heating networks using... more In this paper we investigate the economic viability of geothermal district heating networks using both net present value (NPV) and real options analysis (ROA). We give an introduction to geothermal energy technologies and review the relevant ROA literature focusing on applications in similar fields, such as oil projects. The similarities and differences of oil and geothermal projects are discussed and summarized. The investment structure of geothermal projects is analyzed concerning costs and uncertainties in the different investment stages. We develop a method to assess the impact of temperature uncertainty with ROA. Investments in geothermal projects are evaluated applying a binomial and a trinomial lattice approach. A novel real options model for the evaluation of normally distributed uncertainty is developed for binomial lattices. Using data obtained from a Dutch project in The Hague, we find positive option values for both lattice approaches, compared to negative values for the common NPV calculation. Drilling and production costs are found to have a significant impact on the option value.
World Renewable Energy Congress VI, 2000
In the face of liberalisation many electricity markets are currently being substantially reshaped... more In the face of liberalisation many electricity markets are currently being substantially reshaped. One feature of this change is a gradual shift from centralised to more localised systems for electricity production situated closer to the consumer. Distributed generation (DG) sometimes offers an attractive alternative to large-scale centralised capacity expansion, mainly due to lower initial investment costs and greater flexibility that allows a better match of supply capacities with actual demand. Moreover, there is plenty of scope for using renewable and environmentally less damaging energy sources, an important ingredient in any strategy to curb local pollutant and global greenhouse gas emissions. Uncertainties introduced by the liberalisation of the energy markets, however, and a lack of suitability of traditional approaches to assess the economic performance of DG technologies, often make comparisons between different generation options a challenge. This paper addresses the potential of DG in competitive power markets on a conceptual level. We conclude that the combination of competition and new modular generation technologies will dramatically transform the energy supply business, and that DG can be expected to contribute significantly to the achievement of environmental, regulatory and developmental challenges. KEYWORDS Distributed generation; renewable energy; competitive electricity markets. WHAT IS DISTRIBUTED GENERATION? Recent energy technology developments have led to the introduction of a range of small and medium scale and often modular and renewable energy-fuelled generation technologies into the energy market. While these can be seen as promising alternatives to conventional heat and electricity generation facilities in the future, apart from special circumstances (e.g., remote locations) they are usually not fully competitive yet in liberalised markets and low oil-price regimes-at least when applying traditional cash-flow based valuation approaches. Consequently, in many countries policies have been set up to establish a level playing field for energy produced from such systems and to support the technologies through various kinds of government support (RD&D programmes, subsidy schemes, etc.). Such systems are commonly tagged "distributed", "decentralised", "modular", "localised", or "embedded", because they provide end-use energy in relatively small amounts near the consumers, either in isolation or connected to a distribution network.
SSRN Electronic Journal, 2008
Hauptleitbild des E.ON Energy Research Centers ist es, ein umfassendes Verständnis darüber zu ent... more Hauptleitbild des E.ON Energy Research Centers ist es, ein umfassendes Verständnis darüber zu entwickeln, wie nachhaltige Energieversorgung realisiert werden kann. Dieses Ziel, so die Vision des Energieforschungszentrums, kann durch die Konzentration auf die Reduzierung des Energieverbrauchs und auf die Nutzung umweltfreundlicher Energiequellen realisiert werden.
SSRN Electronic Journal, 2011
In this paper we apply fuzzy set theory to the portfolio optimization of power generation assets,... more In this paper we apply fuzzy set theory to the portfolio optimization of power generation assets, using a semi-mean absolute deviation (SMAD) model as a benchmark and a fuzzy semi-mean absolute deviation (FSMAD) model for comparison. The two models are applied to five onshore wind power plants in Germany considered for the portfolio analysis. The results show that the combinations of favorable assets for efficient portfolios are very similar, although the portfolio shares are markedly different. Also, the return and risk span of the SMAD model are much broader than those of the FSMAD model. The highest returns are generated by portfolios based on the latter model. Offering less portfolio choices, the FSMAD model thus facilitates decision-making. This is in compliance with the notion that portfolio optimization by fuzzy set theory is able to better account for the decisionmaker's preferences under real-world conditions.
SSRN Electronic Journal, 2011
In this paper we investigate how changes in the support scheme may affect electricity generation ... more In this paper we investigate how changes in the support scheme may affect electricity generation from agricultural Combined Heat and Power (CHP) biogas plants in Germany. A recursive Multi-Agent System (MAS) for investment decision-making is coupled with GIS data. The spatial-temporal diffusion model accounts for the limited availability of substrate resources, alternative plant sizes and different heat use combinations. For illustration, we apply the model to the German federal states of North Rhine-Westphalia and Bavaria, for which we estimate an additional economic capacity potential of 409 MW el. Overall, we conclude that current feed-in payments per unit of electric power provided are probably not too far off the optimum level, if one considers the maximum diffusion of CHP units possible. However, the current feed-in system may overtly favor small generating units, thereby failing to incentivize coordination among farmers for joint resource use in larger and more efficient plants. In addition, optimization of the biogas conversion process and feedstock use would also be highly beneficial.
Overview Geothermal energy resources have a large and geopolitically widely dispersed potential a... more Overview Geothermal energy resources have a large and geopolitically widely dispersed potential and are considered as important and relatively clean renewable energy sources of the future. In recent years, utilization of geothermal energy has rapidly increased. Geothermal resources vary widely across locations, depending on depth and temperature of the resource, rock chemistry, and the availability of ground water. The type of resource determines the method of its utilization, and the economic conditions under which it can be exploited. (2) Methods In this paper we develop an economic model of geothermal energy production that builds upon Hotelling's rule and explicitly incorporates geological and engineering principles in the resource owner's decision problem. Moreover, we account for the fact that geothermal reservoirs, if overused, are exhaustible and require substantial regeneration times (quasi- finiteness). The owner of a geothermal heat and/or power plant using the ...
This paper summarizes some major recent empirical studies on export market penetration and policy... more This paper summarizes some major recent empirical studies on export market penetration and policy issues regarding renewable energy technologies (RETs) undertaken in Germany and Switzerland, that are yet unpublished in the English literature. Particularly, it reflects on Germany's and Switzerland's RET exports and imports over the period 1990-2001, and provides some explanations of the historical development - based on the specific national boundary conditions. Examples of the economies of scale and scope and learning curve effects during the 1990s are given and next decades' market volume for renewable energies estimated based on technical and economic potential estimates. The identification of the technical and economic potentials is shown to depend at least partly on the attention paid by the energy sector and the scientific community to particular RETs. Moreover, we point out certain similarities between resource potential data on renewable and non-renewable energ...
Scottish Journal of Political Economy, 1999
Much of the short-run movement in energy demand in the UK is seasonal, and the contribution of lo... more Much of the short-run movement in energy demand in the UK is seasonal, and the contribution of long-run factors to short-run forecasts is slight. Nevertheless, using a variety of techniques, including a recently developed estimation procedure that is applicable irrespective of the orders of integration of the data, we obtain a long-run income elasticity of demand of about one third, and we are unable to reject a zero price elasticity. An econometric model is shown to provide superior short-run forecasts to well-known seasonal time series models ex post, but is inferior to Box-Jenkins SARMA models when the determinants themselves have to be forecast. However, the relatively short data sample and small number of forecasts suggest caution in generalising these results.
Mitigation and Adaptation Strategies for Global Change, 2011
The purpose of this paper is to gain a broad overview and better understanding of the current and... more The purpose of this paper is to gain a broad overview and better understanding of the current and future policies, market trends, prospects and barriers related to Foreign Direct Investment (FDI) in energy efficiency and carbon mitigation in the Russian energy industry. The analysis was conducted by reviewing the relevant scientific and non-scientific literature, and focuses on a variety of theoretical and practice-oriented arguments. In this context, we assess the progress and future potential of Joint Implementation (JI) and the Green Investment Scheme (GIS) as two possible channels for FDI in transnational projects aiming at carbon mitigation and increases in energy efficiency. Based on this assessment, we presume that an Energy Service Company (ESCO), as an important intermediary, can be a well-suited entity for the implementation of the market-oriented mechanisms JI and GIS in Russia in the long term. The compatibility of the main features of JI and GIS with the working procedures under the ESCO model can generate numerous synergy effects and deliver an effective vehicle for overcoming the majority of transaction barriers specific for the Russian energy market. A possibility to overcome these barriers would assist the modernization of the Russian energy industry and improve a "win-win" situation for foreign companies seeking to invest strategically in energy efficiency and carbon mitigation projects.
International Journal of Technology Management, 2005
Promising small-scale wood pellet heating systems with sizable market potentials have started to ... more Promising small-scale wood pellet heating systems with sizable market potentials have started to penetrate the residential heating market in Europe and elsewhere. Despite significant technological progress, cost reduction, improved convenience and reliability, and reduced environmental impact, diffusion of such systems will nonetheless take time. Framework and market conditions, and especially drivers and barriers and the overall merits of such systems in comparison to alternative solutions, need to be properly understood by policy-makers and entrepreneurs for the successful promotion of this technology. In this article we cover three important aspects related to small-scale pellet heating systems. First, we summarise recent technological, socioeconomic , and institutional trends. Second, we report on results from a comparative analysis of the direct and indirect external costs and benefits of this technology. Third, we discuss the usefulness of various diffusion modelling approaches used in economics in the light of the technology scrutinised and existing data constraints.
eonerc.rwth-aachen.de
... 342-353. Fig. 1: Decision screen in emissions market experiment Source: FCN. Contact: Dr. rer... more ... 342-353. Fig. 1: Decision screen in emissions market experiment Source: FCN. Contact: Dr. rer. oec. Gaurav S. Ghosh T +49 (0)241 80 49840 F +49 (0)241 80 49829 [email protected]. Abschlußinformationen. ...
European Journal of Operational Research, 2009
... applications of PMCA evaluate options in the form of measures, individual projects, technolog... more ... applications of PMCA evaluate options in the form of measures, individual projects, technologies, or ... complexity and uncertainty inherent in long-term challenges, such as sustainable development. ... In an ideal world, thorough data collection and good modelling would enable us ...
Energy Policy, 2007
This paper provides a detailed case study on Austria's by far largest biomass cogenerati... more This paper provides a detailed case study on Austria's by far largest biomass cogeneration plant. The plant is located in the city of Vienna and scheduled to be put into operation by mid-2006. Given the urban location of the plant and its significant biomass fuel input requirements, fuel delivery logistics play an important role—not only from an economic point of view, but also in relation to supply security and environmental impact. We describe and analyse the history of the project, putting particular emphasis on the main driving forces and actors behind the entire project development process. From this analysis we deduce the following main socio-economic drivers and success factors for the realisation of large bioenergy projects in urban settings: (1) a critical mass of actors; (2) a priori political consensus; (3) the existence of a problem (and problem awareness) that calls for decisive steps to be taken; (4) institutional innovation and changes in the mindset of the main decision makers; (5) favourable economic conditions; (6) change agents that are actively engaged from an early stage of development; (7) intra-firm supporters at different hierarchical levels and from different departments; and (8) targeted study tours that help to reduce uncertainty, to enable leapfrogging in project planning and design, and to build up confidence in the project's feasibility and chance of success.
Energy Policy, 2007
This paper reports on an empirical investigation about the economic and CO2 mitigation impacts of... more This paper reports on an empirical investigation about the economic and CO2 mitigation impacts of bioenergy promotion in the Austrian federal province of Vorarlberg. We study domestic value added, employment and fiscal effects by means of a static input-output analysis. The bioenergy systems analysed comprise biomass district heating, pellet heating, automated wood chips heating systems, logwood stoves and boilers, ceramic stoves, and buffer storage facilities. The results indicate that gross economic effects are significant, both regarding investment and operation of the systems, and that the negative economic effects caused by the displacement of decentralised systems might be in the order of 20-40%. Finally, CO2 mitigation effects are substantial, contributing already in 2004 around 35% of the 2010 CO2 mitigation target of the Land Vorarlberg for all renewables set for 2010.
Energy Policy, 2011
The battery size of a Plug-in Hybrid Electric Vehicle (PHEV) is decisive for the electrical range... more The battery size of a Plug-in Hybrid Electric Vehicle (PHEV) is decisive for the electrical range of the vehicle and crucial for the cost-effectiveness of this particular vehicle concept. Based on the energy consumption of a conventional reference car and a PHEV, we introduce a comprehensive total cost of ownership model for the average car user in Germany for both vehicle types. The model takes into account the purchase price, fixed annual costs and variable operating costs. The amortization time of a PHEV also depends on the recharging strategy (once a day, once a night, after each trip), the battery size, and the battery costs. We find that PHEVs with a 4 kWh battery and at current lithium-ion battery prices reach the break-even point after about 6 years (5 years when using the lower night-time electricity tariffs). With higher battery capacities the amortization time becomes significantly longer. Even for the small battery size and assuming the EU-15 electricity mix, a PHEV is found to emit only around 60% of the CO 2 emissions of a comparable conventional car. Thus, with the PHEV concept a cost-effective introduction of electric mobility and reduction of greenhouse gas emissions per vehicle can be reached.
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Papers by Reinhard Madlener