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On the Economics of Ramping Rate Restrictions at Hydro Power Plants: Balancing Profitability and Environmental Costs

Author

Listed:
  • Shilei Niu

    (Department of Economics, University of Waterloo)

  • Margaret Insley

    (Department of Economics, University of Waterloo)

Abstract

This paper examines the impact of ramping rate restrictions imposed on hydro operations to protect aquatic ecosystems. A dynamic optimization model of the profit maximizing decisions of a hydro operator is solved for various restrictions on water flow, using data for a representative hydro operation in Ontario. Profits are negatively affected, but for a range of restrictions the impact is not large. Ramping restrictions cause a redistribution of hydro production over a given day, which can result in an increase in total hydro power produced. This affects the need for power from other sources with consequent environmental impacts.

Suggested Citation

  • Shilei Niu & Margaret Insley, 2010. "On the Economics of Ramping Rate Restrictions at Hydro Power Plants: Balancing Profitability and Environmental Costs," Working Papers 1017, University of Waterloo, Department of Economics, revised Dec 2010.
  • Handle: RePEc:wat:wpaper:1017
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    File URL: http://economics.uwaterloo.ca/documents/10-017MI.pdf
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    References listed on IDEAS

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    1. Donald N. Dewees, 2008. "Pollution and the Price of Power," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 81-100.
    2. 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.
    3. David A. Harpman, 1999. "Assessing the Short-Run Economic Cost of Environmental Constraints on Hydropower Operations at Glen Canyon Dam," Land Economics, University of Wisconsin Press, vol. 75(3), pages 390-401.
    4. Philpott, A. B. & Craddock, M. & Waterer, H., 2000. "Hydro-electric unit commitment subject to uncertain demand," European Journal of Operational Research, Elsevier, vol. 125(2), pages 410-424, September.
    5. 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.
    6. Daniel D. Huppert, 1999. "Snake River Salmon Recovery: Quantifying The Costs," Contemporary Economic Policy, Western Economic Association International, vol. 17(4), pages 476-491, October.
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    Citations

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    Cited by:

    1. Petras Punys & Antanas Dumbrauskas & Egidijus Kasiulis & Gitana Vyčienė & Linas Šilinis, 2015. "Flow Regime Changes: From Impounding a Temperate Lowland River to Small Hydropower Operations," Energies, MDPI, Open Access Journal, vol. 8(7), pages 1-24, July.
    2. Pérez-Díaz, J.I. & Millán, R. & García, D. & Guisández, I. & Wilhelmi, J.R., 2012. "Contribution of re-regulation reservoirs considering pumping capability to environmentally friendly hydropower operation," Energy, Elsevier, vol. 48(1), pages 144-152.
    3. 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.
    4. Guisández, Ignacio & Pérez-Díaz, Juan I. & Wilhelmi, José R., 2016. "Approximate formulae for the assessment of the long-term economic impact of environmental constraints on hydropeaking," Energy, Elsevier, vol. 112(C), pages 629-641.

    More about this item

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other

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