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

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  • 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.

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  • 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
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    Cited by:

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    4. 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).
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    8. 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.
    9. Fang, Delin & Chen, Bin, 2017. "Linkage analysis for the water–energy nexus of city," Applied Energy, Elsevier, vol. 189(C), pages 770-779.
    10. 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.
    11. 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.
    12. 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).
    13. 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.
    14. 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.
    15. 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.
    16. 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.
    17. 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.
    18. 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.
    19. Duan, Cuncun & Chen, Bin, 2017. "Energy–water nexus of international energy trade of China," Applied Energy, Elsevier, vol. 194(C), pages 725-734.
    20. 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.
    21. 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.
    22. 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.
    23. 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).

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