A Detailed Power System Planning Model: Estimating the Long-Run Impact of Carbon-Reducing Policies

In this paper, a much more detailed representation of the nation's electricity system than has been traditionally used in policy models is employed. This detailed representation greatly increases the computational difficulty of obtaining optimal solutions, but is necessary to accurately model the location of new investment in generation. Given the proposed regulation of CO2 emissions from US power plants, an examination of economically efficient policies for reducing these emissions is warranted. The model incorporates realistic physical constraints, investment and retirement of generation, and price-responsive load to simulate the effects of policies for limiting CO2 emissions over a twenty-year forecast horizon. Using network reductions for each of the three electric system regions in the U.S. And Canada, an optimal economic dispatch, that satisfies reliability criteria, is assigned for 12 typical hour-types in each year. Three scenarios are modeled that consider subsidies for renewables and either CO2 emissions regulation on new investment or cap-and-trade. High and low gas price trends are also simulated and have large effects on prices of electricity but small impacts on CO2 emissions. Low gas prices with cap-and-trade reduce CO2 emissions the most, large subsidies for renewables alone do not reduce carbon emissions much below existing levels. Extensive retirement of coal-fired power plants occurs in all cases.