Sustainable Low-Carbon Isolated Island Electricity Systems - Policy and Investment Impacts Assessed Using System Dynamics

Matthew, George Jr. Shaundel (2017). Sustainable Low-Carbon Isolated Island Electricity Systems - Policy and Investment Impacts Assessed Using System Dynamics. PhD thesis The Open University.



This thesis presents a novel System Dynamics (SD) policy and investment analysis framework for future low-carbon electricity systems, using an electrically isolated island system as its case study.

Current electricity systems are undergoing a long-term transition towards reduced fossil fuel use, primarily driven by high fuel costs, environmental concerns and the desire for energy security. These systems are facing a number of evolving policy drivers: most notably, current attempts to pursue higher levels of renewable energy sources, greater energy efficiency and other supporting technologies. Emerging challenges are shaping the low-carbon objectives of future electricity systems and the ensuing implications for future policy and investment decisions. This thesis presents a number of critical policy recommendations allied with longer-term investment observations, evolving from the nexus between the environmental and energy security concerns of an island-based electricity system.

Island systems such as São Miguel, are small enough to be understood while being large enough to reveal highly complex structures and inherent time and spatial interactions within and between social, economic and technical factors. It is argued that a systematic SD-based approach can reveal possible system structure trajectories, with such insights assisting the understanding of overall sustainability while recognising emergent challenges and behaviours.

The thesis shows that learning-by-doing renewables cost reductions exists but are not very significant in island electricity systems. Additionally, it shows that setting low-carbon policy targets is beneficial for emissions reductions, but meeting these targets too early is either inefficient or impractical if targets are unrealistic. Critical evaluations of endogenous electricity demand growth and the system capacity margin are provided, which highlights consequential policy challenges for island-based systems. The most important and influential low-carbon agendas giving endogenous impacts on electricity demand are elaborated. The thesis also confirms that more effective policies, for sustained renewables uptake and improved investor decision-making for the generation mix, can be achieved. Insights distilled from smaller electricity systems can help frame the outlook of larger systems.

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