Incentives of Carbon Dioxide Regulation for Investment in ...

Incentives of Carbon Dioxide Regulation for Investment in ...

Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies Anya Castillo (MIT) Joshua Linn (MIT and Resources for the Future) June 25, 2010 Background Question Motivation Methods Findings Related Work Direction of Technology Adoption Which technologies are favored most under the implementation of a price on carbon dioxide (CO2) emissions? Research Focus Free of Distributional Issues Direct effects of CO2 Policy on Electricity Prices 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 2 Background Question Motivation Methods Findings Related Work

Incentives due to CO2 Regulation Higher Wholesale Power Prices Incentives for Innovation and Adoption of Clean Tech CAVEAT: Clean Tech differs in performance and resource potential. Wind Solar Nuclear Coal + CCS Hydro Etc. 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 3 Background Question Motivation Methods Findings Related Work This Study: Focuses on Directed Technology Incentives due to increases in

Electricity Prices Incorporates differences in operational characteristics and fuel availability across technologies (Connors 2004, Cullen 2009) Unit Commitment Formulation Preceding Studies: Theoretical Jung 1996, Fischer 2003, Weber &Neuhoff 2010, Goulder&Mathai 2000 Empirical Carlson 2000, Popp 2003, Linn 2008, DOE NEMS, MIT EPPA 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 4 Background Stylized Model Empirical Model Methods Findings Electricity Market with No CO2 Price 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 5 Background

Stylized Model Empirical Model Methods Findings Electricity Market under Increasing CO2 Price No change in merit order when price of Coal < Gas 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 6 Background Stylized Model Empirical Model Methods Findings Electricity Market under Increasing CO2 Price Change in merit order when price of Coal > Gas 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 7 Background Stylized Model Empirical Model Methods Findings Research Approach

Model ERCOT electricity market in 2008 Annual Simulations with Hourly Solutions $0-50/tCO2 (at $10/tCO2 increments) Cost-Minimization Unit-Commitment Mixed Integer Problem with chronological Monet Carlo* Analysis of Directed Incentives to Technologies Current ERCOT: Nuclear, Coal, Gas, Wind Hypothetical Units: Solar, Integrated Gasification Combined Cycle (IGCC), and Advanced Gas/Oil Combined Cycle (Adv CC) Wind and Solar Resource Potential No Transmission Network *Memphis version 3.7, prepared by IIT for Red Electrica de Espaa 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 8 Background Stylized Model Empirical Model Findings ERCOT Supply Curve 700 2 Coal Fuel Price 2 Natural Gas Fuel Price Actual in 2008 600 Marginal Cost ($/MWh) Methods

2008 Avg Fuel Prices Coal $1.33 Natural Gas $6.63 500 400 Natural Gas Nuclear 300 Avg Marginal Costs Nuclear $5.61 Coal $18.96 Natural Gas $71.11 200 Coal 100 0 0 02/09/2020 10 20 30 40 50 60 Capacity (GW)

70 80 90 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 9 Background Stylized Model Empirical Model Methods Findings ERCOT (Texas) is renewable resource-rich Wind Solar (NREL) Competitive Renewable Energy Zones (CREZs) 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 10 Background Stylized Model Empirical Model Methods Findings

Temporal Resource Potential Seasonal Average Probability Wind Solar 1 1 0.9 0.9 0.8 0.8 0.7 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.1 0

0.3 Winter Spring Summer Fall 0.2 2 4 6 Winter Spring Summer Fall 0.2 0.1 8 10 12 14 16 18 20 22 24 0 2 4 6 8 10 12 14 16 18 20 22 24 Hour of the Day 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 11 Background Simulation Results Discussion Methods Findings

System Operations at No CO2 Price 1 Generation-to-Load Correlation 0.03 0.64 0.93 -0.30 0.37 Average Probability Nuclear Coal Natural Gas Wind Solar 0.9 0.8 Coal Marginal Unit Wind Generation Solar Generation 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 02/09/2020 2 4 6 8 10 12 14 16 18 20 22 24 Hour of the Day

Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 12 Background Simulation Results Discussion Methods Findings Effect of CO2 Price on Generation Share 60 Nuclear Coal Natural Gas Wind Generation Share (%) 50 40 30 20 10 0 02/09/2020 0 10 20 30 Price per ton of CO

40 50 2 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 13 Background Simulation Results Discussion Methods Findings Marginal Abatement Cost Curve Offset Emissions (MtCO2) 30 25 20 15 10 Emissions = 168.59 MtCO2 5 0 0 10 20 30 40

50 Price per ton of CO2 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 14 Background Simulation Results Discussion Methods Findings System operations change with a CO2 Price Capacity Factor (%) Coal Units Natural Gas Units 100 100 90 90 80 80 70

70 60 60 50 50 40 Upper Quartile 40 30 Median Mean 30 Lower Quartile 10 20 10 0 0 10 20 20

30 40 50 0 0 10 20 30 40 50 Price per ton of CO2 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 15 Background Simulation Results Discussion Methods Findings Decrease in the Marginal Emissions Rate 0.5 0.5

Full Day 0.4 Night 0.3 0.4 0.2 0.1 Probability Coal is the Marginal Unit 0.3 0 0 10 20 30 40 50 0.5 0.2 0.4 Day (7am-7pm) 0.3 0.1 0.2 0.1 0

0 10 20 30 40 50 0 0 10 20 30 40 50 Price per ton of CO2 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 16 Background Simulation Results Discussion Methods Findings Which techs run when coal is marginal? Nuclear Wind Solar IGCC Advanced CC Price per ton of CO2 50 40 30 20 10

0 -1 02/09/2020 -0.8 -0.6 -0.4 -0.2 0 0.2 0.4 Correlation Coefficient 0.6 0.8 1 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 17 Background Simulation Results Discussion Methods Findings Variations in Revenue Growth Growth from No CO2 Price (%) 100 90 80 70

Fossil Fuel Tech 100 Coal 0=5.14 /kWh Natural Gas 0=6.96 IGCC 0=4.99 Advanced CC 0=6.16 90 80 60 50 50 40 40 30 30 20 20 10 10 0 10 20

30 Wind 0=4.15/kWh Nuclear 0=4.83 Solar 0=5.77 70 60 0 Clean Tech 40 50 0 0 10 20 30 40 50 Price per ton of CO2 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 18

Background Simulation Results Discussion Methods Findings Incremental Gains to Clean Tech Generating Units Growth in Average Revenue (from No CO2 Price) Percentage of Total Units (%) 6 Wind 020=36.3% Solar 020=20.7% Nuclear 020=27.6% 5 Average Revenue 6 5 Wind 20=5.65 Solar 20=6.97 Nuclear20=6.17 4 4 3 3 2 2

1 1 0 -10 -8 -6 -4 -2 0 2 4 Demeaned Growth in Average Revenue from Baseline (%) 0 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Demeaned Average Revenue (/kWh) 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 19 Background Simulation Results Discussion Methods Findings Variations in Marginal Profit Growth Fossil Fuel Tech 100

Growth from No CO2 Price (%) 80 60 Coal 0=3.38 /kWh Natural Gas 0=1.77 IGCC 0=3.53 Advanced CC 0=1.48 60 40 20 20 0 0 -20 -20 -40 -40 10 20 30 Wind0=4.15/kWh Nuclear 0=4.27 Solar0=5.77 80

40 -60 0 Clean Tech 100 40 50 -60 0 10 20 30 40 50 Price per ton of CO2 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 20 Background Simulation Results Discussion Methods

Findings Main Points Technologies that operate when the heavyemitters are marginal reap the most benefit Weak CO2 prices result in greater incremental gains since there is slight change to merit order Resource potential across time and space matters for intermittent generation CO2 prices as a cost-effective investment incentive in clean tech versus other policies 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 21 Thank You! Anya Castillo [email protected] Joshua Linn [email protected] 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 22 Supplemental Slides 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 23 Change in Cost, Revenue and Profit

02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 24 Summary Statistics by Technology 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 25 Simulation with Zero Carbon Price 02/09/2020 Incentives of Carbon Dioxide Regulation for Investment in Clean Electricity Technologies 26

Recently Viewed Presentations

  • Supporting Nevada&#x27;s Military and Veterans

    Supporting Nevada's Military and Veterans

    Through the VIC program, NDVS has an opportunity to contact the veteran where they live, help connect them to benefit representatives and honor them for their service. Improve quality of care for veterans in care facilities throughout the state—not just...
  • PCG Meeting Template - ICPE

    PCG Meeting Template - ICPE

    ICPE High Level Meeting - Ljubljana, Slovenia There are mixed demands of GLCs. Commercial role and expected to provide financial returns - they are listed companies and have private and minority shareholders On the other, they are pressured to help...
  • Acid-Base Part 2 - Currituck County Schools

    Acid-Base Part 2 - Currituck County Schools

    Calculate the pH at the halfway point of the titration. Or use pH at halfway point to find K. a or K b. of substance titratedCalculation of the pH at the equivalence point. OR using the equivalence point to find...
  • Other Magnetic Nuclei than 1H H (Deuterium): I

    Other Magnetic Nuclei than 1H H (Deuterium): I

    Arial Times New Roman Symbol Default Design CS ChemDraw Drawing Other Magnetic Nuclei than 1H Fluoroacetone, CH3COCH2F 13C-NMR Spectroscopy Double Resonance: Spin-Spin Decoupling 13C-NMR of diethylphthalate 13C{1H} NMR of diethylphthalate 13C{1H}-NMR of diethylphthalate Peak Intensities in 13C-NMR Chemical Shifts in...
  • Le recours à l&#x27;informatique sur un problème d&#x27;Euler et de Lucas

    Le recours à l'informatique sur un problème d'Euler et de Lucas

    Aucun « sablier magique » ayant 7 entiers carrés pour tout a < 2,5 ∙ 1025 Recherches informatiques Andrew Bremner, Acta Arithmetica, 2001 Remarque simple Pour qu'un carré magique 3x3 puisse avoir 9 entiers carrés, il faut que toutes les...
  • EPA ICS UNIT LEADER Webinar - CLU-IN

    EPA ICS UNIT LEADER Webinar - CLU-IN

    * NOTE: This slide is generic unit leader responsibilities found on pages 3-3 through 3-4 of the IMH UNIT LEADER RESPONSIBILITIES - In ICS, a number of the Unit Leader's responsibilities are common to all units in all parts of...
  • Lecture 2  SWOT Analysis & Porters Five Forces

    Lecture 2 SWOT Analysis & Porters Five Forces

    If neutrality applies selectively (oxymoron alert) to only one sliver of the network, then it is merely a political tool of one set of companies to cripple its competitors. At a time of continued national economic peril, the last thing...
  • PowerPoint Slides for Starting Out with C++ Early Objects ...

    PowerPoint Slides for Starting Out with C++ Early Objects ...

    is a member function that is used to initialize data members of a class. Is called automatically when an object of the class is created. Must be a . public. ... PowerPoint Slides for Starting Out with C++ Early Objects...