Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

Inaccurate Energy Forecasts are Costing Us the Earth: Here’s Why

admin by admin
June 21, 2015
in Uncategorized
0
0
SHARES
3
VIEWS
Share on FacebookShare on Twitter

by John McKibbin and Ed Langham, The Conversation

How will our electricity system change in the future? Will we consume more electricity over time or less? And how will we meet our energy needs?

The answers to these questions have considerable public policy implications but our ability to forecast these changes has so far been limited.

Electricity forecasts just four years ago predicted strong, uninterrupted growth in electricity demand. In reality, demand has fallen for the past four years.


Electricity forecasts over time adapted from AEMO data

Why does that matter? These overestimates have contributed to the over-investment in electricity network infrastructure, commonly referred to as “gold plating”. When the demand didn’t materialise as forecast, the result was a much-publicised electricity price shock.

Energy forecasts also underpin global scenarios of greenhouse gas emissions. In fact a new report from market analyst RepuTex suggests Australia has been overestimating future greenhouse gas emissions, in part due to poor energy demand forecasts.

A matter of perspective

There are two broad perspectives for analysing the energy system: the “top-down” perspective which views energy systems as a set of of markets, and the “bottom-up” perspective which views energy systems as a collection of appliances, equipment and infrastructure.

Both are critically important perspectives. The top-down perspective contributes important insights into how changes in markets impact the energy sector, including shifts in world fuel prices and economic activity. The bottom-up perspective contributes important insights into the impacts of changes in behaviour and technology.

Yet when it comes to energy policy making, the top-down perspective has dominated in Australia and internationally to our collective detriment, leading to unreliable forecasting, poor policy choices and billions in infrastructure spending that turned out to be unnecessary.

Conventional electricity forecasting

The dominant method for energy forecasting is a top-down modelling approach called econometric forecasting. This involves forecasting future energy requirements based on historical trends and correlations with a range of factors including weather, income, electricity prices and economic activity.

So why have the models overestimated demand? Subsequent research has revealed that the econometric forecasts failed to account for improvements in the energy efficiency of appliances and buildings, the rapid uptake of solar PV and structural shifts in industrial energy consumption.

In other words, the forecasts failed because they falsely assumed that historical correlations between energy demand and economic activity would remain consistent.

However, the efficiency of appliances and buildings has improved markedly in recent years thanks to a suite of regulated minimum performance standards, while many energy intensive industries have scaled back considerably. The result has been an incremental decoupling of energy demand from economic activity, making old models redundant at best, and misleading at worst.

A different approach

Instead of solely using statistical correlations to predict energy use, we can model energy demand using end-use forecasting.

This approach, currently being developed by the UTS Institute for Sustainable Futures and others, forecasts energy demand from the bottom up based on how energy is consumed by appliances, buildings, and industrial equipment.

The result is a much more detailed picture of how energy is consumed, including how changes in behaviour and improvements in technology will impact the energy system in the future.


Household electricity demand simulation

Biased forecasts to biased policy

A top-down bias also results in a bias towards top down policy. This is because the models we use to understand a policy problem inevitably frame the proposed solutions.

Energy policy makers in Australia and internationally have focused much of their attention on carbon pricing as a means to decarbonise our energy system. Although carbon pricing is desirable, it is far from a silver bullet.

Complementary measures are needed to overcome widespread market failures such as imperfect information, inefficient pricing and split incentives.

A top-down bias also leads to a bias toward supply-side solutions such as new electricity generators and network augmentations.

Energy policy makers and climate change campaigners alike often ignore the dominant role that energy efficiency will play in the decarbonisation of our economy. Energy efficiency is the largest and cheapest source of energy and greenhouse gas abatement.

Much like solar energy, energy efficiency is available in every home and business. It also reduces energy bills and improves industrial competitiveness.

A more integrated policy response therefore combines top-down carbon pricing policies with a tailored combination of policies including information, regulation and incentives.

For example, it is widely recognised that households and businesses often don’t take into account energy costs when purchasing buildings, appliances and vehicles. In response consumers need a tailored combination of clear energy labeling, minimum performance standards and in some cases rebates or finance, particularly for low income households.

The silver lining

The upshot of our historical top-down bias is that decarbonising our economy will be easier and cheaper than we previously imagined.

Mandatory performance standards in appliances and buildings are already driving significant reductions in the energy consumption of households and businesses. For example, a fridge purchased today consumes around half the electricity of a fridge purchased 20 years ago while air conditioners are now 50% more efficient.

Over a similar period solar PV and other renewable energy technologies have experienced cost reductions far beyond forecasts made even three years ago, leading to a dramatic uptake of renewable generation across Australia and internationally.

These shifts weren’t incorporated in electricity demand forecasts or climate change emission projections. This means we can achieve much more ambitious emission reduction targets at a lower cost than we previously thought possible.

But to get there, we need to raise our collective ambition and make smart decisions, based on a more nuanced understanding of how our society uses and generates energy today.

The ConversationJohn McKibbin is Senior Research Consultant at University of Technology, Sydney.

This article was originally published on The Conversation. Read the original article.

Previous Post

East Asian Maths Teaching Method Boosts English Children’s Progress by a Month

Next Post

What Are ‘Boomerang Buyers’?

Related Posts

Is crypto investment safe?
Economics

Is Crypto Investment Safe?

by John Wanguba
March 21, 2023
Bitcoin Price Surge Breathes Life Into Collapsing Crypto Firms
Economics

Bitcoin Price Surge Breathes Life Into Collapsing Crypto Firms

by John Wanguba
March 21, 2023
Russians Overwhelm Kazakhstan With Sanction-Busting Requests – Sources
Business

Russians Overwhelm Kazakhstan With Sanction-Busting Requests – Sources

by John Wanguba
March 21, 2023
Ban CBDC Now! – Florida Governor Ron DeSantis
Economics

Ban CBDC Now! – Florida Governor Ron DeSantis

by John Wanguba
March 21, 2023
Microsoft Offers EU Remedies Seeking Approval On Activision Deal
Business

Microsoft Offers EU Remedies Seeking Approval On Activision Deal

by John Wanguba
March 21, 2023
Next Post

What Are 'Boomerang Buyers'?

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins bank banking banks Binance Bitcoin Bitcoin market Bitcoin mining blockchain BTC business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe finance FTX inflation investment market analysis Metaverse mining NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Is Crypto Investment Safe?
  • Bitcoin Price Surge Breathes Life Into Collapsing Crypto Firms
  • Russians Overwhelm Kazakhstan With Sanction-Busting Requests – Sources

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish