Low Carbon Policy and Technology in the Power Sector: Evaluating Economic and Environmental Effects
In this thesis, I present four research papers related by their focus on environmental and economic effects of low-carbon policies and technologies in electric power. The papers address a number of issues related to the operation and design of CCS-equipped plants with solvent storage and bypass, the effect of Renewable Portfolio Standards (RPS) on cycling of coal-fired power plants, and the EPA’s proposed CO2 emissions rule for existing power plants. In Chapter 2, I present results from a study of the design and operation of power plants equipped with CCS with flue gas bypass and solvent storage. I considered whether flue gas bypass and solvent storage could be used to increase the profitability of plants with CCS. Using a pricetaker profit maximization model, I evaluated the increase in NPV at a pulverized coal (PC) plant with an amine-based capture system, a PC plant with an ammonia-based capture system, and a natural gas combined-cycle plant with an amine-based capture system when these plants were equipped with an optimally sized solvent storage vessel and regenerator. I found that while flue gas bypass and solvent storage increased profitability at low CO2 prices, they ceased to do so at CO2 prices high enough for the overall plant to become NPV-positive. In Chapter 3, I present results from a Unit Commitment and Economic Dispatch model of the PJM West power system. I quantify the increase in cycling of coal-fired power plants that results when complying with a 20% RPS using wind power, accounting for cycling costs not usually included in power plant bids. I find that while additional cycling does increase cycling-related production costs and emissions of CO2, SO2, and NOX, these increases are small compared to the overall reductions in production costs and air emissions that occur with high levels of wind. In proposing its existing power plant CO2 emissions standard, the Environmental Protection Agency determined that significant energy efficiency would be available to aid in compliance. In Chapter 4, I use an expanded version of the model of Chapter 3 to evaluate compliance with the standard with and without this energy efficiency, as well as under several other scenarios. I find that emissions of CO2, SO2, and NOX are relatively insensitive to the amount of energy efficiency available, but that production costs increase significantly when complying without efficiency. In complying with the EPA’s proposed existing power plant CO2 emissions standard, states will have the choice of whether to comply individually or in cooperation with other states, as well as the choice of whether to comply with a rate-based standard or a mass-based standard. In Chapter 5, I present results from a linear dispatch model of the power system in the continental U.S. I find that cooperative compliance reduces total costs, but that certain states will prefer not to cooperate. I also find that compliance with a mass-based standard increases electricity prices by a larger margin than does compliance with a rate-based standard, with implications for the distribution of surplus changes between producers and consumers.