Economics DepartmentBaker Institute Energy market research:

1
Economics Department/Baker Institute Energy
market research

• Recently completed projects and work in progress

2
Electricity and Energy Markets in Japan

• Reform and restructuring of Japans electricity
  supply system
• Increasing competition in Japans natural gas
  market
• Is the global warming threat an issue for
  Japanese energy policy?
• Alternative ways of using Sakhalin gas
• new trunk pipeline?
• new HVDC link from Hokkaido?
• LNG imports using existing infrastructure?

3
Evolution of the world LNG market I

• Grew out of the Sakhalin project
• risks of using LNG versus pipeline gas depend on
  market structures
• Traditionally, LNG development financed using
  long-term bilateral contracts
• similar to the oil market of the 1970s
• much oil is now sold spot and risks are hedged
  using financial contracts
• the LNG market is likely to change in a similar
  way over the next decade

4
Evolution of the world LNG market II

• Falling costs of LNG transport increase market
  depth
• Expanded LNG market with CCGT technology
  environmental concerns
• Falling liquefaction and re-gassification costs
  reduce risks of investing first
• Expected life of fields also is falling
• real time 3D leads to faster exploitation
• smaller fields now economic

5
Latin American Energy Markets I

• The Mexican electricity supply system
• LP model of Mexican HV transmission system
• forecasts of Mexican electricity demand in
  aggregate and its regional components
• economies of scale in power generation
• trade in electricity between the US and Mexico
• corporatization and privatization in the Mexican
  electricity supply industry
• Efficient pricing of natural gas in Mexico
• Private investment in Mexican natural gas
  pipelines?

6
Latin American Energy Markets II

• Privatization of the electricity supply and oil
  industries in Brazil
• Modeling the relationship between economic
  development and energy use
• Opportunities for exploiting Venezuelan heavy oil
  reserves
• geological and economic issues

7
Previous Research on Electricity

• Reform of the electricity supply system in
  Victoria, Australia
• Regarded by the World Bank as world best
  practice in power system reform
• Competitive wholesale market with prices that
  closely reflect costs and demands
• Active electricity future and options trade in
  Australia
• Market includes long term contracting as well as
  a wholesale spot market
• Recently introduced an ancillary services market
• Real-time data on the Australian market available
  on the internet

8
Australian data (30 minute intervals) on prices
(RRP) and demand
9
Australian data (weekly) on prices (RRP) and
demand
10
Economics Department/Baker InstituteResearch on
Electricity

• Australian market has worked well
• Delivered low prices to consumers
• Prices reflective of costs
• Promoted more efficient use of energy resources
• Stimulated new entry, innovation
• Long term contracts have helped to maintain
  stability
• Electricity supply reform can be done correctly
• Californian situation is not a necessary result
  of electricity market reform and deregulation

11
Other Baker Institute Activities

• Conferences on new energy technologies
• fuel cells, solar, clean coal, small-scale
  nuclear, hydrocarbon extraction
• superconductivity
• Hybrid gas/electric automobiles
• Research proposal for center to study new energy
  technologies
• Conference and seminar series on the global
  warming issue