Hydropower Impacts on Electrical System Production Costs in the Southwest United States

Dominique M. Bain and Thomas L. Acker
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Dominique M. Bain: School of Earth Sciences and Environmental Sustainability, Northern Arizona University, Flagstaff, AZ 86011, USA
Thomas L. Acker: Mechanical Engineering, Northern Arizona University, Flagstaff, AZ 86011, USA

Energies, 2018, vol. 11, issue 2, 1-21

Abstract: The Colorado River is an important natural resource for the Southwestern United States. Predicted climate change impacts include increased temperature, decreased rainfall and increased probability of drought in this region. Given the large amount of hydropower on the Colorado River and its importance to the bulk electricity system, this purpose of this study was to quantify the value hydropower in operating the electrical system, and examined changes in hydropower value and electricity costs under different possible future drought conditions and regional generation scenarios. The goal was to better understand how these scenarios affect operating costs of the bulk electrical system, as well as the value of the hydropower produced, and proposed a method for doing so. The calculated value of the hydroelectric power was nearly double the mean locational marginal price in the study area, about $73 to $75 for most scenarios, demonstrating a high value of the hydropower. In general, it was found that reduced water availability increased operating costs, and increased the value of the hydropower. A calculated value factor showed that when less hydroelectric power is available, the hydropower is more valuable. Furthermore, the value factor showed that the value of hydro increases with the addition of solar or the retirement of thermal generating resources.

Keywords: hydroelectric power; drought; Southwestern United States; Colorado River; Navajo Generating station; bulk electric system; locational marginal prices; hydropower value; production cost modeling; grid integration of solar and hydropower (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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