A decreasing elasticity of substitution between clean and dirty energy and the potential implications for policy



Tony Wiskich, PhD Student, CAMA


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Thursday, 23 August, 2018 - 11:30 to 12:30

Using a stylised structural model of electricity generation, Tony derives a (bimodal) production function for clean and dirty technologies with two elasticities: a high elasticity for low clean penetration and a low elasticity for high clean penetration. He finds elasticities start at over 10 and reduce to just above unity above a switch point of around 50 per cent clean electricity penetration, where curtailment of intermittent generation dominates.

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