The eco-costs of electricity are based on the costs of replacing current energy systems by renewable energy systems. How do these eco-costs fluctuate with the price of oil?
The eco-costs of electricity is not directly related to the price of oil. The reason is that the marginal prevention costs is primarily based on the replacement of electricity from coal-fired power plants by electricity from windmills parks at sea (the most expensive solution on the road to sufficient CO2 reduction). The costs of coal is approx. 20% of the costs of electricity from a windmill park at the sea. The costs of coal was relatively constant over the last 10 years and is highly realted with the actual costs of production and transport. Although speculation has increased the price of coal considerably in 2008, it is expected that this peak in coal prices will stabilise back to the production costs. So it is expected that the price of coal will just follow the general trend of price inflation, as the price of windmills from the sea will do. Therefore, de level of eco-costs of energy is relatively stable and will follow the price inflation.
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