1. Electricity Generation missing markets with co2 emission constraints
4/1/2015
Electricity Generation missing markets with co2 emission constraints
Donald Hanson, Argonne National Laboratory
David Schmalzer, Argonne National Laboratory
Peter Balash, National Energy Technology Laboratory
Christopher Nichols, National Energy Technology Laboratory
Presented at the 33rd USAEE/IAEE North American Conference
Pittsburgh, Pennsylvania
October, 2015
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11/24/2018
Argonne National Laboratory

2. 4/1/2015
acknowledgements
Don Hanson and Dave Schmalzer want to thank NETL for support. Disclaimer: The work shown does not necessarily reflect the views of Argonne National Laboratory, the University of Chicago, the National Energy Technology Laboratory, or the U.S. Government
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11/24/2018
Argonne National Laboratory

3. 4/1/2015
overview
We describe the model and solution concept for achieving least-cost CO2 emission reductions
An integrated electric utility will operated its plants to minimize costs (including present value of future costs)
But the introduction of gas-fired generators in competitive markets neglects the cycling costs that they may impose on existing coal-fired power plants (CFPP)
Gas units tend to be dispatched before existing CFPP under a carbon tax regime, driving down capacity factors (i.e., utilization) of existing CFPPs
Cycling damages to older coal units will be discussed in Dave Schmalzer’s presentation.
Implications for economic “theory of the firm.”
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11/24/2018
Argonne National Laboratory

4. 4/1/2015
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5. Load Duration Curve (LDC) shape and net unit dispatch area: Year 2025
4/1/2015
Load Duration Curve (LDC) shape and net unit dispatch area: Year 2025
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11/24/2018
Argonne National Laboratory

6. 4/1/2015
Linear approximation to Scenario shifts in gas supply function in the ESIM model
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11/24/2018
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7. General Equilibrium Gas price
4/1/2015
General Equilibrium Gas price
Rising dependence on gas for power generation drives up gas price.
The year 2022 start of CO2 emissions reduction shocks gas price
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11/24/2018
Argonne National Laboratory

8. Emissions target: CO2 from all electricity Generation
4/1/2015
Emissions target: CO2 from all electricity Generation
Better to set a target and minimize costs than to set a price on emissions with unknown adjustment costs due to CFPP cycling damages.
2022 start
Difficult reductions
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Argonne National Laboratory

9. Shadow Price on emissions achieving target
4/1/2015
Shadow Price on emissions achieving target
Supports advanced technologies
CFPP retirements
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11/24/2018
Argonne National Laboratory

10. 4/1/2015
Total variable costs of units dispatched and their resulting capacity factors
As shown in the figure, the increasing variable cost curve is flatter than the decreasing CF curve. The latter is constrained by the slope of the load curve.
Under a high carbon tax, the gas units have lower variable costs and are dispatched before the coal units with higher variable costs
11/24/2018
Argonne National Laboratory

11. 4/1/2015
Sources of electricity generation with no correction for high gas and Renewable penetration driving CFPP retirements
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11/24/2018
Argonne National Laboratory

12. Capital expenditures are dominated by renewables
4/1/2015
Capital expenditures are dominated by renewables
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13. Spending on fuel is dominated by gas
4/1/2015
Spending on fuel is dominated by gas
Lowering cycling damages on CFPP would lower both gas consumption and, in general equilibrium, gas prices and expenditures.
Powerplant dispatch, which is near knife-edge, plays a key role in determining the costs of CO2 reductions.
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11/24/2018
Argonne National Laboratory