In this analysis, the impact of δ based on the power consumptions in Australia has been detailed. It is observed that a high level of consumption is observed.
Morton (2017) states that there is a growing demand for the power consumption. This has led to the increase in the wholesale power prices of the product. This has led to rising of the products that were lesser than the carbon price. This shows that the power consumption of the products increased and an increase in the price based on the supply and demand principle is observed. Along with this, the use of coal as a fuel source has been dwindling in the past few years. This has added to the existing strain of meeting the consumer requirements. The demand for the Gas had increased based on this principle. The average wholesale prices had increased from $134 to megawatt house. This was just in the $65-$67 in the last two years. The increase in the prices is based on the increase in gas prices and investment uncertainties that exist in the markets. Investors are wary about where to invest for their power requirements. The export market of Australia impacts the wholesale electricity prices. Alternative sources such as wind energy are not perennials and it is not stable. Based on this, there is an increase in the use of gas source during those times. These notions are applied to the formula that is formulated by
Arrow which is δ = ρ + gη.
The consumption discounted rate refers to the time that is considered between the current times and the changes that are likely to occur in the future. The rate of consumption is expected to increase over time with the absence in changes in the policies. The marginal value of consumption is expected to increase over time with consumption (Arrow, 2011). The future utility is expected to be impacted by this process. It is expected from this analogies that future uncertainty is expected to be increase. It can be termed that the marginal and the overall value of consumption is expected to increase. The social value is expected to change. Based on this analysis, it can be alluded that no changes in the legislation would factor in the social power of the value. There would be increase in the consumption and the prices of the gases would increase substantially in the future (Chow, 2014).. Along with this, the demand for coal has reduced. A paradigm shift would be observed of the existing protocol of not using coal. The use of coal patterns has changed in the past. The use of coal has been discarded by many of the companies and state government
The issues of supply and demand would cause the equilibrium to be impacted and a mandatory need is required for looking for newer alternative sources.
Thus, from this analysis, it can be alluded that the companies need to look for newer ways of compensating the requirement of gas in future. In case the ρ does not change, it is expected to negatively impact the environment and consumptions patterns are likely to increase in the future.