Marginal Carbon Dioxide Production Rates of the NW Power System - Draft for Comment

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Request for comment

The Council is requesting comment for its report
Marginal Carbon Dioxide Production Rates of the Northwest Power System

The cost of future carbon dioxide regulation has been a significant factor in resource planning in the Pacific Northwest. To avoid making higher cost resource choices, a direct evaluation of this risk requires an estimate of the carbon dioxide emissions avoided by purchasing conservation or another resource. The Council has periodically produced this study using the AURORAxmp model to help inform Council staff and regional stakeholder analysis.

Please email comments by June 30, 2017

Background

At the April 2017 Council meeting, staff presented a discussion of the results of the Marginal Carbon Emissions Study.

The impact of future carbon dioxide (CO2) regulation is a significant risk in long-term utility resource planning. Improper accounting for this risk when evaluating resources may result in poor resource decisions and higher costs for the region’s ratepayers. This study is an examination of the rate of avoided CO2 emissions over time under different water and CO2 price conditions.

In comparison to the opportunity to purchase a similar resource on the market, a resource, such as conservation, that avoids CO2 emissions, mitigates risk. The opportunity for risk mitigation depends on what the next available megawatt of generating resource is available and how much CO2 it emits. The marginal resource is the least variable cost resource available and needed to meet the next megawatt of load.

In the Northwest, the average marginal CO2 production rate is substantially higher than the average CO2 production rate from all electricity generation. This is because hydroelectricity, wind, and solar which have low operating costs and no CO2 emissions are brought on-line before coal-fired or natural gas-fired generating units. However, since the next megawatt of generation avoided would be available from the marginal unit, not an average of all the units online, the emissions of the marginal unit best represents the avoided carbon risk.

Questions about the analysis methodology?  Contact John Ollis at the Council.