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Optimal Provision of Hydroelectric Power under Environmental and Regulatory Constraints

Author

Listed:
  • Brian K. Edwards
  • Silvio J. Flaim
  • Richard E. Howitt

Abstract

Hydroelectric power plants can quickly and inexpensively respond to changes in electricity demand. However, this operational flexibility can cause negative environmental impacts and these environmental effects are mitigated through direct restrictions on hydropower operations, rather than taxes or other marketbased mechanisms. A dynamic model of hydroelectric generation is used to derive hourly hydroelectric generation and purchases of replacement power to meet contract demand in the presence of these operational restrictions. The pattern of hydropower generation is shown to depend on differences between on-peak and off-peak spot electricity prices within the operational restrictions set by external regulatory mechanisms.

Suggested Citation

  • Brian K. Edwards & Silvio J. Flaim & Richard E. Howitt, 1999. "Optimal Provision of Hydroelectric Power under Environmental and Regulatory Constraints," Land Economics, University of Wisconsin Press, vol. 75(2), pages 267-283.
    • Handle: RePEc:uwp:landec:v:75:y:1999:i:2:p:267-283
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    Citations

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    Cited by:

    1. Matthew J. Kotchen & Michael R. Moore & Frank Lupi & Edward S. Rutherford, 2006. "Environmental Constraints on Hydropower: An Ex Post Benefit-Cost Analysis of Dam Relicensing in Michigan," Land Economics, University of Wisconsin Press, vol. 82(3), pages 384-403.
    2. Steffen, Bjarne, 2012. "Prospects for pumped-hydro storage in Germany," Energy Policy, Elsevier, vol. 45(C), pages 420-429.
    3. Crampes, Claude & Moreaux, Michel, 2009. "Pumped Storage and Energy Saving," TSE Working Papers 09-073, Toulouse School of Economics (TSE).
    4. Kern, Jordan D. & Characklis, Gregory W., 2017. "Low natural gas prices and the financial cost of ramp rate restrictions at hydroelectric dams," Energy Economics, Elsevier, vol. 61(C), pages 340-350.
    5. Zhao, Guangzhi & Davison, Matt, 2009. "Optimal control of hydroelectric facility incorporating pump storage," Renewable Energy, Elsevier, vol. 34(4), pages 1064-1077.
    6. Niu, Shilei & Insley, Margaret, 2013. "On the economics of ramping rate restrictions at hydro power plants: Balancing profitability and environmental costs," Energy Economics, Elsevier, vol. 39(C), pages 39-52.
    7. Bielsa, Jorge & Duarte, Rosa, 2003. "Modelling water resource allocation: a case study on agriculture versus hydropower production," MPRA Paper 36923, University Library of Munich, Germany.
    8. Lea Kosnik, 2010. "Balancing Environmental Protection and Energy Production in the Federal Hydropower Licensing Process," Land Economics, University of Wisconsin Press, vol. 86(3).
    9. Stefan Ambec & Joseph A. Doucet, 2003. "Decentralizing hydro power production," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 36(3), pages 587-607, August.
    10. CRAMPES Claude & MOREAUX Michel, 2008. "Pumping Water to Compete in Electricity Markets," LERNA Working Papers 08.13.257, LERNA, University of Toulouse.
    11. Sichilalu, Sam & Wamalwa, Fhazhil & Akinlabi, Esther T., 2019. "Optimal control of wind-hydrokinetic pumpback hydropower plant constrained with ecological water flows," Renewable Energy, Elsevier, vol. 138(C), pages 54-69.
    12. Alexandre Stamford da Silva & Fernando Campello de Souza, 2008. "The economics of water resources for the generation of electricity and other uses," Annals of Operations Research, Springer, vol. 164(1), pages 41-61, November.
    13. Rayamajhee, Veeshan & Joshi, Aakrit, 2018. "Economic trade-offs between hydroelectricity production and environmental externalities: A case for local externality mitigation fund," Renewable Energy, Elsevier, vol. 129(PA), pages 237-244.
    14. Bjarne Steffen, 2011. "Prospects for pumped-hydro storage in Germany," EWL Working Papers 1107, University of Duisburg-Essen, Chair for Management Science and Energy Economics, revised Dec 2011.
    15. Cristobal Gallego-Castillo & Marta Victoria, 2020. "Improving Energy Transition Analysis Tool through Hydropower Statistical Modelling," Energies, MDPI, vol. 14(1), pages 1-17, December.
    16. Crampes, Claude & Moreaux, Michel, 2010. "Pumped storage and cost saving," Energy Economics, Elsevier, vol. 32(2), pages 325-333, March.
    17. Niu, Shilei & Insley, Margaret, 2016. "An options pricing approach to ramping rate restrictions at hydro power plants," Journal of Economic Dynamics and Control, Elsevier, vol. 63(C), pages 25-52.
    18. Kosnik, Lea, 2008. "Consolidation and ownership trends of nonfederal hydropower generating assets, 1980-2003," Energy Economics, Elsevier, vol. 30(3), pages 715-731, May.

    More about this item

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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