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The Changing Role of Fuel Switching: Implications for Energy Policy and Analysis

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P. Söderholm
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This article analyzes the role of fuel switching and fuel choice in the power generation sector. It concludes that while fuel choice in the past mainly was an issue of new capacity choice, it has become increasingly important to consider the choice between new and existing capacity as well as fuel switching within existing power plants. Increased uncertainty about fuel prices, low electricity demand growth, deregulation of power markets, environmental policies, and technological change have all contributed to this increase in flexibility.