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

Author

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  • 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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    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.
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    Cited by:

    1. Lei Yu & Benyou Jia & Shiqiang Wu & Xiufeng Wu & Peng Xu & Jiangyu Dai & Fangfang Wang & Liming Ma, 2019. "Cumulative Environmental Effects of Hydropower Stations Based on the Water Footprint Method—Yalong River Basin, China," Sustainability, MDPI, vol. 11(21), pages 1-12, October.
    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.
    5. 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, vol. 8(7), pages 1-24, July.
    6. 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.
    7. 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.
    8. Mohammad Nure Alam, 2021. "Accessing the Effect of Renewables on the Wholesale Power Market," International Journal of Energy Economics and Policy, Econjournals, vol. 11(2), pages 341-360.

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    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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