Fossil fuel flexibility in west European power generation and the impact of system load factors

This paper analyzes short-run interfuel substitution in west European power generation, and the impact of system load factors on fossil fuel choice. The problems are studied within a restricted translog cost share model. The paper concludes that interfuel substitution in existing power plants is substantial, especially that between oil and gas. This is consistent with the notion that short-run fuel substitution takes place in dual- or multi-fired plants, by switching load between different single-fired plants, and by some conversions of power plants to be able to burn alternate fuels. The empirical investigation also indicates that the system load factor is a notable determinant of fossil fuel choices in west Europe, and the paper ends with an assessment of the fuel consequences of some load management schemes in the region. (C) 2001 Elsevier Science B.V. All rights reserved. JEL classifications: D24; Q41.