Computational General Equilibrium Modelling Assessment Mr Craig Mickle and Dr Jyothi Gali Ernst & Young (EY) TUESDAY, 6 OCTOBER 2015
Outline 1. Objectives 2. Model description and approach 3. Key scenarios 4. Key inputs and assumptions 5.Key Outputs
1. Objectives 1. Objectives • Assess the potential economic merits for the SA economy of greater involvement in any part of the nuclear fuel cycle • What it means for GDP, employment etc. • Determine the economy-wide effects on inter and intra-state flows of: • Labour • Capital • Other inputs …on the South Australian economy, industries and regions
2. Modelling description and approach 2. Modelling approach – conceptual framework Integrated economy-energy and business cases Electricity modelling
2. Modelling description and approach 2. Modelling approach – CGE model • As part our approach we are using the Victoria University Regional Model (VURM) • The VURM is the only CGE model that addresses all key attributes listed in the study requirement: • Well documented, widely used • An up-to-date database • Flexibility to handle embryonic industries such as NFC new activities • A dynamic model of Australia's six states and two territories • Regional models of the economy, with region-specific prices, region-specific consumers, region-specific industries, and so on.
2.Modelling description and approach 2. Modelling approach – Electricity model • EY electricity model provides the future evolution of the supply side of the electricity market in the long run based on a optimization approach • Provides projections for wholesale electricity market in NEM • Provides very rich source of supply side of the electricity market which is mapped to the demand side of the electricity market in the CGE model
2. Modelling description and approach 2. Modelling approach - CGE & electricity model • The CGE model produces demand for electricity by user in the economy as one of the model outputs. • The demand for electricity is an important input to electricity modelling. The electricity model provides information on: • Technology shares by state and fuel type • Wholesale and retail prices by state and customer type • Thermal efficiency, emission coefficients
2. Modelling description and approach 2. Modelling approach – two parts 1) As a complete nuclear fuel cycle industry doesn’t not currently exit in Australia, we need to modify the VURM database to ensure its interaction with the rest of the economy is adequately captured. • This involves a review of data sources, public submissions and relevant business cases commissioned for this study. 2) Model simulation set-up for 3 nuclear investment scenario analyses. • Business as usual scenario - characterised by no policy shift leading to no additional investment in three ‘new’ parts of the cycle (BIS) • Market driven expansion (IS2) • Proactive investment (IS3)
3. Key scenarios 3. Key characteristics of scenarios Description BIS IS2 IS3 Model set-up Base year 2009-10 2009-10 2009-10 2010 to 2050 Simulation period 2017 to 2050 2017 to 2050 Inputs Official projections and assumptions CAPEX Business cases Business cases OPEX Business cases Business cases Production Business cases Business cases Sales Business cases Business cases Prices Business cases Business cases Start of construction Business cases Business cases Start of operation Business cases Business cases Fuel cycle Uranium mining Uranium mining, Uranium mining, extraction, and extraction extraction, waste fabrication, nuclear power disposal generation and waste disposal
3. Key scenarios 3. Key characteristics of scenarios Description BIS IS2 IS3 Atmospheric targets Climate change Stabilises Stabilises Stabilises concentrations mitigation concentrations of concentrations of of greenhouse gases at measures greenhouse gases at greenhouse gases at 450ppm CO2-e by around 2100 450ppm CO2-e by 450ppm CO2-e by around 2100 around 2100 Burden sharing rules Global burden sharing Conservative level of Aggressive level of rules consistent with burden sharing for burden sharing for the 450ppm Australia relative to the Australia to take into international partners account of high Australian per capita level GHG emissions To be determined To be determined To be determined Basis for permit allocations Trading permits To be determined To be determined To be determined Carbon price To be determined To be determined To be determined Existing RET and state To be determined To be determined Australian emission Government energy targets efficiency measures
4. Key inputs and assumptions 4. Key inputs - BIS Official projections for developing a baseline of Australian and State economies: • Commonwealth Treasury 2015-16 Budget and Fourth Intergenerational Report (IGR4) • SA Treasury: Consider the SA Treasury projections on macroeconomic variables in the model baseline, including GSP, population, consumption, investment, real wages etc. We also consider the fiscal and budget projections of the SA Government • The official economic projections of the Commonwealth Department of Industry Office of Chief Economist: we have incorporated the energy projections from the Department of industry into our CGE baseline as far as possible and also energy technology shares in the Australian and SA economies
4. Key inputs and assumptions 4. Key inputs – Investment scenarios • Information and data gathered through the Commission’s other activities including that received through the public submissions process and expert opinions • For NFC investment scenarios, inputs mainly sourced from the three business cases commissioned for quantitative analyses: nuclear power plant; radioactive waste storage and disposal facilities; and uranium conversion, enrichment and fuel fabrication facilities in South Australia. • Key inputs include: • CAPEX, by year and major expenditure item • OPEX, by year and major expenditure items • Value of production enabled by year and destination of supply (downstream component in the fuel cycle, domestic demand, exports).
5. Key outputs 5. Key outputs Modelling results highlight the impact of the fuel cycle investment scenarios on the SA and Australian economies Key indicators include: • Macro variables – exchange rate, current account balance etc. • Gross national income • Gross domestic product/gross state product/gross regional product • Labour market variables – employment, wages, labour mobility • Industry variables – gross value add, output, investment, employment, prices • Tax receipts • Electricity market – technology shares, electricity prices • Emissions – type by user
5. Key outputs 5. Key outcomes • Quantifiable micro and macroeconomic benefits of investing in parts of the nuclear fuel cycle in South Australia measured as deviations from the baseline (BIS)
1 15
Recommend
More recommend
