The impacts of meeting a tight CO2 performance standard on the electric power sector

Donald Hanson, David Schmalzer, Christopher Nichols and Peter Balash

Energy Economics, 2016, vol. 60, issue C, 476-485

Abstract: This paper presents innovative modeling of complex interactions among gas-fired generators, coal-fired power plants, and renewables (wind and solar) when pushed hard to reduce CO2 emissions. A hypothetical CO2 technology performance standard, giving rise to a shadow price on CO2 emissions, was specified as part of the study design. In this work we see gas generation rapidly replacing coal generation. To understand the fate of coal-based generation, it is important to examine trends at a granular level. An important feature of our model, the Electricity Supply and Investment Model (ESIM) is that it contains a unit inventory with unit characteristics and a memory of how each unit is operated over time. Cycling damages that individual coal units incur are a function of cumulative wear and tear over time. The expected remaining life of a cycled coal unit will depend on the severity of the cycling and for how many years. Deteriorating operating characteristics of a cycled unit over time results in higher operating costs, slipping down the dispatch loading order, and hence an acceleration of cycling damage, that is, a viscous circle of decline. The rate of CFPP retirements will increase for lower gas prices, higher price on CO2 emissions, and greater penetration of variable and intermittent renewables.

Keywords: Electricity analysis; Energy modeling; Gas demand; Intermittent renewables; Power plant dispatch; Power plant retirements (search for similar items in EconPapers)
JEL-codes: Q21 Q28 Q41 Q42 Q47 Q54 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:60:y:2016:i:c:p:476-485

DOI: 10.1016/j.eneco.2016.08.018

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