IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v111y2013icp186-198.html
   My bibliography  Save this article

A competitive Markov decision process model for the energy–water–climate change nexus

Author

Listed:
  • Nanduri, Vishnu
  • Saavedra-Antolínez, Ivan

Abstract

Drought-like conditions in some parts of the US and around the world are causing water shortages that lead to power failures, becoming a source of concern to independent system operators. Water shortages can cause significant challenges in electricity production and thereby a direct socioeconomic impact on the surrounding region. Our paper presents a new, comprehensive quantitative model that examines the electricity–water–climate change nexus. We investigate the impact of a joint water and carbon tax proposal on the operation of a transmission-constrained power network operating in a wholesale power market setting. We develop a competitive Markov decision process (CMDP) model for the dynamic competition in wholesale electricity markets, and solve the model using reinforcement learning. Several cases, including the impact of different tax schemes, integration of stochastic wind energy resources, and capacity disruptions due to droughts are investigated. Results from the analysis on the sample power network show that electricity prices increased with the adoption of water and carbon taxes compared with locational marginal prices without taxes. As expected, wind energy integration reduced both CO2 emissions and water usage. Capacity disruptions also caused locational marginal prices to increase. Other detailed analyses and results obtained using a 30-bus IEEE network are discussed in detail.

Suggested Citation

  • Nanduri, Vishnu & Saavedra-Antolínez, Ivan, 2013. "A competitive Markov decision process model for the energy–water–climate change nexus," Applied Energy, Elsevier, vol. 111(C), pages 186-198.
    • Handle: RePEc:eee:appene:v:111:y:2013:i:c:p:186-198
    DOI: 10.1016/j.apenergy.2013.04.033
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261913003280
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2013.04.033?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kabashi, Skender & Bekteshi, Sadik & Ahmetaj, Skender & Kabashi, Gazmend & Najdovski, Dimitrij & Zidansek, Aleksander & Slaus, Ivo, 2011. "Effects of Kosovo's energy use scenarios and associated gas emissions on its climate change and sustainable development," Applied Energy, Elsevier, vol. 88(2), pages 473-478, February.
    2. Stavins, Robert, 2007. "A U.S. Cap-and-Trade System to Address Global Climate Change," Working Paper Series rwp07-052, Harvard University, John F. Kennedy School of Government.
    3. Sovacool, Benjamin K. & Sovacool, Kelly E., 2009. "Identifying future electricity-water tradeoffs in the United States," Energy Policy, Elsevier, vol. 37(7), pages 2763-2773, July.
    4. Mathiesen, Brian Vad & Lund, Henrik & Karlsson, Kenneth, 2011. "100% Renewable energy systems, climate mitigation and economic growth," Applied Energy, Elsevier, vol. 88(2), pages 488-501, February.
    5. Scott, Christopher A. & Pierce, Suzanne A. & Pasqualetti, Martin J. & Jones, Alice L. & Montz, Burrell E. & Hoover, Joseph H., 2011. "Policy and institutional dimensions of the water-energy nexus," Energy Policy, Elsevier, vol. 39(10), pages 6622-6630, October.
    6. Tung, Ching-Pin & Tseng, Tze-Chi & Huang, An-Lei & Liu, Tzu-Ming & Hu, Ming-Che, 2013. "Impact of climate change on Taiwanese power market determined using linear complementarity model," Applied Energy, Elsevier, vol. 102(C), pages 432-439.
    7. Jos Sijm & Karsten Neuhoff & Yihsu Chen, 2006. "CO 2 cost pass-through and windfall profits in the power sector," Climate Policy, Taylor & Francis Journals, vol. 6(1), pages 49-72, January.
    8. Nanduri, Vishnu & Kazemzadeh, Narges, 2012. "Economic impact assessment and operational decision making in emission and transmission constrained electricity markets," Applied Energy, Elsevier, vol. 96(C), pages 212-221.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liang, M.S. & Huang, G.H. & Chen, J.P. & Li, Y.P., 2022. "Energy-water-carbon nexus system planning: A case study of Yangtze River Delta urban agglomeration, China," Applied Energy, Elsevier, vol. 308(C).
    2. Suo, C. & Li, Y.P. & Mei, H. & Lv, J. & Sun, J. & Nie, S., 2021. "Towards sustainability for China's energy system through developing an energy-climate-water nexus model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 135(C).
    3. Sun, Alexander Y., 2020. "Optimal carbon storage reservoir management through deep reinforcement learning," Applied Energy, Elsevier, vol. 278(C).
    4. Su, Huai & Zhang, Jinjun & Zio, Enrico & Yang, Nan & Li, Xueyi & Zhang, Zongjie, 2018. "An integrated systemic method for supply reliability assessment of natural gas pipeline networks," Applied Energy, Elsevier, vol. 209(C), pages 489-501.
    5. Zhang, Xiaohong & Qi, Yan & Wang, Yanqing & Wu, Jun & Lin, Lili & Peng, Hong & Qi, Hui & Yu, Xiaoyu & Zhang, Yanzong, 2016. "Effect of the tap water supply system on China's economy and energy consumption, and its emissions’ impact," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 660-671.
    6. Wang, Can & Zheng, Xinzhu & Cai, Wenjia & Gao, Xue & Berrill, Peter, 2017. "Unexpected water impacts of energy-saving measures in the iron and steel sector: Tradeoffs or synergies?," Applied Energy, Elsevier, vol. 205(C), pages 1119-1127.
    7. Dai, Jiangyu & Wu, Shiqiang & Han, Guoyi & Weinberg, Josh & Xie, Xinghua & Wu, Xiufeng & Song, Xingqiang & Jia, Benyou & Xue, Wanyun & Yang, Qianqian, 2018. "Water-energy nexus: A review of methods and tools for macro-assessment," Applied Energy, Elsevier, vol. 210(C), pages 393-408.
    8. Wakeel, Muhammad & Chen, Bin & Hayat, Tasawar & Alsaedi, Ahmed & Ahmad, Bashir, 2016. "Energy consumption for water use cycles in different countries: A review," Applied Energy, Elsevier, vol. 178(C), pages 868-885.
    9. Zhi-Fu Mi & Su-Yan Pan & Hao Yu & Yi-Ming Wei, 2014. "Potential impacts of industrial structure on energy consumption and CO2 emission: a case study of Beijing," CEEP-BIT Working Papers 51, Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology.
    10. Duan, Cuncun & Chen, Bin, 2017. "Energy–water nexus of international energy trade of China," Applied Energy, Elsevier, vol. 194(C), pages 725-734.
    11. J. Magnier, Hamza & Jrad, Asmaa, 2019. "A minimal simplified model for assessing and devising global LNG equilibrium trade portfolios while maximizing energy security," Energy, Elsevier, vol. 173(C), pages 1221-1233.
    12. Wang, Saige & Chen, Bin, 2021. "Unraveling energy–water nexus paths in urban agglomeration: A case study of Beijing–Tianjin–Hebei," Applied Energy, Elsevier, vol. 304(C).
    13. Zhang, Xiaodong & Vesselinov, Velimir V., 2016. "Energy-water nexus: Balancing the tradeoffs between two-level decision makers," Applied Energy, Elsevier, vol. 183(C), pages 77-87.
    14. Nogueira Vilanova, Mateus Ricardo & Perrella Balestieri, José Antônio, 2015. "Exploring the water-energy nexus in Brazil: The electricity use for water supply," Energy, Elsevier, vol. 85(C), pages 415-432.
    15. Fang, Delin & Chen, Bin, 2017. "Linkage analysis for the water–energy nexus of city," Applied Energy, Elsevier, vol. 189(C), pages 770-779.
    16. Logan, Lauren H. & Stillwell, Ashlynn S., 2018. "Probabilistic assessment of aquatic species risk from thermoelectric power plant effluent: Incorporating biology into the energy-water nexus," Applied Energy, Elsevier, vol. 210(C), pages 434-450.
    17. Panda, Manas Ranjan & Tyagi, Arjun & Dhanya, C.T. & Verma, Ashu & Swain, Anshuman, 2023. "Vulnerability assessment of thermal power plants in India under water stress conditions," Energy, Elsevier, vol. 276(C).
    18. Bao-jun Tang & Pi-qin Gong & Cheng Shen, 2017. "Factors of carbon price volatility in a comparative analysis of the EUA and sCER," Annals of Operations Research, Springer, vol. 255(1), pages 157-168, August.
    19. Munguía-López, Aurora del Carmen & González-Bravo, Ramón & Ponce-Ortega, José María, 2019. "Evaluation of carbon and water policies in the optimization of water distribution networks involving power-desalination plants," Applied Energy, Elsevier, vol. 236(C), pages 927-936.
    20. Bai, Yang & Zhou, Peng & Tian, Lixin & Meng, Fanyi, 2016. "Desirable Strategic Petroleum Reserves policies in response to supply uncertainty: A stochastic analysis," Applied Energy, Elsevier, vol. 162(C), pages 1523-1529.
    21. Zhu, Xiaojie & Guo, Ruipeng & Chen, Bin & Zhang, Jing & Hayat, Tasawar & Alsaedi, Ahmed, 2015. "Embodiment of virtual water of power generation in the electric power system in China," Applied Energy, Elsevier, vol. 151(C), pages 345-354.
    22. Geng, Jiang-Bo & Ji, Qiang & Fan, Ying, 2014. "A dynamic analysis on global natural gas trade network," Applied Energy, Elsevier, vol. 132(C), pages 23-33.
    23. Liu, Gengyuan & Yang, Zhifeng & Fath, Brian D. & Shi, Lei & Ulgiati, Sergio, 2017. "Time and space model of urban pollution migration: Economy-energy-environment nexus network," Applied Energy, Elsevier, vol. 186(P2), pages 96-114.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Okadera, Tomohiro & Geng, Yong & Fujita, Tsuyoshi & Dong, Huijuan & Liu, Zhu & Yoshida, Noboru & Kanazawa, Takaaki, 2015. "Evaluating the water footprint of the energy supply of Liaoning Province, China: A regional input–output analysis approach," Energy Policy, Elsevier, vol. 78(C), pages 148-157.
    2. Ha, Yuejiao & Teng, Fei, 2013. "Midway toward the 2 degree target: Adequacy and fairness of the Cancún pledges," Applied Energy, Elsevier, vol. 112(C), pages 856-865.
    3. Ding, Tao & Liang, Liang & Zhou, Kaile & Yang, Min & Wei, Yuqi, 2020. "Water-energy nexus: The origin, development and prospect," Ecological Modelling, Elsevier, vol. 419(C).
    4. Ackerman, Frank & Fisher, Jeremy, 2013. "Is there a water–energy nexus in electricity generation? Long-term scenarios for the western United States," Energy Policy, Elsevier, vol. 59(C), pages 235-241.
    5. Sharifzadeh, Mahdi & Hien, Raymond Khoo Teck & Shah, Nilay, 2019. "China’s roadmap to low-carbon electricity and water: Disentangling greenhouse gas (GHG) emissions from electricity-water nexus via renewable wind and solar power generation, and carbon capture and sto," Applied Energy, Elsevier, vol. 235(C), pages 31-42.
    6. Flachsland, Christian & Brunner, Steffen & Edenhofer, Ottmar & Creutzig, Felix, 2011. "Climate policies for road transport revisited (II): Closing the policy gap with cap-and-trade," Energy Policy, Elsevier, vol. 39(4), pages 2100-2110, April.
    7. David Font Vivanco & Ranran Wang & Edgar Hertwich, 2018. "Nexus Strength: A Novel Metric for Assessing the Global Resource Nexus," Journal of Industrial Ecology, Yale University, vol. 22(6), pages 1473-1486, December.
    8. Yang, Liu & Yan, Haiyan & Lam, Joseph C., 2014. "Thermal comfort and building energy consumption implications – A review," Applied Energy, Elsevier, vol. 115(C), pages 164-173.
    9. Gregory N. Sixt & Claudia Strambo & Jingjing Zhang & Nicholas Chow & Jie Liu & Guoyi Han, 2020. "Assessing the Level of Inter-Sectoral Policy Integration for Governance in the Water–Energy Nexus: A Comparative Study of Los Angeles and Beijing," Sustainability, MDPI, vol. 12(17), pages 1-19, September.
    10. Wakeel, Muhammad & Chen, Bin & Hayat, Tasawar & Alsaedi, Ahmed & Ahmad, Bashir, 2016. "Energy consumption for water use cycles in different countries: A review," Applied Energy, Elsevier, vol. 178(C), pages 868-885.
    11. Feijoo, Felipe & Das, Tapas K., 2014. "Design of Pareto optimal CO2 cap-and-trade policies for deregulated electricity networks," Applied Energy, Elsevier, vol. 119(C), pages 371-383.
    12. Tonini, Davide & Vadenbo, Carl & Astrup, Thomas Fruergaard, 2017. "Priority of domestic biomass resources for energy: Importance of national environmental targets in a climate perspective," Energy, Elsevier, vol. 124(C), pages 295-309.
    13. Andrea Menapace & Simone Santopietro & Rudy Gargano & Maurizio Righetti, 2021. "Stochastic Generation of District Heat Load," Energies, MDPI, vol. 14(17), pages 1-17, August.
    14. Luigi Aldieri & Jonas Grafström & Kristoffer Sundström & Concetto Paolo Vinci, 2019. "Wind Power and Job Creation," Sustainability, MDPI, vol. 12(1), pages 1-23, December.
    15. Lawrence H. Goulder, 2013. "Markets for Pollution Allowances: What Are the (New) Lessons?," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 87-102, Winter.
    16. Chernyavs’ka, Liliya & Gullì, Francesco, 2007. "Interaction of carbon and electricity prices under imperfect competition," MPRA Paper 5866, University Library of Munich, Germany.
    17. Østergaard, P.A. & Lund, H. & Thellufsen, J.Z. & Sorknæs, P. & Mathiesen, B.V., 2022. "Review and validation of EnergyPLAN," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    18. Lund, Henrik & Thellufsen, Jakob Zinck & Sorknæs, Peter & Mathiesen, Brian Vad & Chang, Miguel & Madsen, Poul Thøis & Kany, Mikkel Strunge & Skov, Iva Ridjan, 2022. "Smart energy Denmark. A consistent and detailed strategy for a fully decarbonized society," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    19. Muhammad Amir Raza & Muhammad Mohsin Aman & Altaf Hussain Rajpar & Mohamed Bashir Ali Bashir & Touqeer Ahmed Jumani, 2022. "Towards Achieving 100% Renewable Energy Supply for Sustainable Climate Change in Pakistan," Sustainability, MDPI, vol. 14(24), pages 1-23, December.
    20. Veith, Stefan & Werner, Jörg R. & Zimmermann, Jochen, 2009. "Capital market response to emission rights returns: Evidence from the European power sector," Energy Economics, Elsevier, vol. 31(4), pages 605-613, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:111:y:2013:i:c:p:186-198. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.