Exploring the Economic Value of Hydropower in the Interconnected Electricity System
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Economics Technical Report Number EC-2006-03 Exploring the Economic Value of Hydropower in the Interconnected Electricity System United States Department of the Interior Bureau of Reclamation December 2006 Form Approved REPORT DOCUMENTATION PAGE OMB No. 0704-0188 Public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden to Washington Headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suit 1204, Arlington VA 22202-4302, and to the Office of Management and Budget, Paperwork Reduction Report (0704-0188), Washington DC 20503. 1. AGENCY USE ONLY (Leave Blank) 2. REPORT DATE 3. REPORT TYPE AND DATES COVERED December 2006 Final 4. TITLE AND SUBTITLE 5. FUNDING NUMBERS Exploring the Economic Value of Hydropower in the Interconnected Electricity System 6. AUTHOR(S) David A. Harpman 7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES) 8. PERFORMING ORGANIZATION REPORT NUMBER Bureau of Reclamation Denver Federal Center EC-2006-03 P.O. Box 25007 Denver, CO 80225-0007 9. SPONSORING/MONITORING AGENCY NAME(S) AND ADDRESS(ES) 10. SPONSORING/MONITORING AGENCY REPORT NUMBER DIBR 11. SUPPLEMENTARY NOTES 12a. DISTRIBUTION/AVAILABILITY STATEMENT 12b. DISTRIBUTION CODE Available from the National Technical Information Service, Operations Division, 5285 Port Royal Road, Springfield, Virginia 22161 (303) 487-4650 13. ABSTRACT (Maximum 200 words) This document describes the interrelationship of hydropower plants with the electricity system, including coal, gas and oil powerplants, emissions, demand side management (DSM) programs and the cost of supplying electricity to meet consumer demand. It also provides documentation for a personal computer based simulation program allowing users to explore the effects of environmental and other restrictions on hydropower plants and the resulting effects on the costs of supplying electricity in an interconnected system, the use of fossil fuels and air emissions. Varying the parameters controlling these plants (fuel costs, etc.) and changing the constraints on the hydropower plants yields detailed information about the physical operation of the system, the costs of meeting demand and the important role of hydropower in the process. 14. SUBJECT TERMS– 15. NUMBER OF PAGES 139 pages Hydropower, interconnected electricity system, economic value. 16. PRICE CODE 17. SECURITY CLASSIFICATION 18. SECURITY CLASSIFICATION 19. SECURITY CLASSIFICATION 20. LIMITATION OF ABSTRACT OF REPORT OF THIS PAGE OF ABSTRACT UL UL UL UL NSN 7540-01-280-5500 Standard Form 298 (Rev. 2-89) Prescribed by ANSI Std. 239-18 298-102 Economics Technical Report Number EC-2006-03 Exploring the Economic Value of Hydropower in the Interconnected Electricity System David A. Harpman Economics Group (86-68270) Bureau of Reclamation Technical Service Center Denver, Colorado 80225 United States Department of the Interior Bureau of Reclamation December 2006 This page intentionally blank. ACRONYMS AND ABBREVIATIONS AF Acre-feet (of water) CY Calender year kW Kilowatt kWh Kilowatt-hour kV Kilovolt MBTU Millions of British Thermal Units MW Megawatt MWh Megawatt-hour NG Natural gas USFWS United States Fish and Wildlife Service WY Water year DISCLAIMER The commercial and trade names of a number of products are referred to in this document. These references are offered as a statement of fact only and do not imply endorsement by the Bureau of Reclamation, any other government agency or any of their employees or agents. i This page intentionally blank. ii PURPOSE AND RATIONALE The purpose of this interagency effort is to develop a set of quality materials to foster awareness, education and understanding about hydropower and the interconnected electric power system. ACKNOWLEDGMENTS The invaluable contributions of Jim Caudill, U.S. Fish and Wildlife Service, Elliot Rosenberg, U.S. Environmental Protection Agency, and Tom Veselka, Argonne National Laboratory, throughout this project are gratefully acknowledged. Their patient technical review, assistance and advice substantially improved this document. FUNDING FOR THIS STUDY The Bureau of Reclamation’s Denver Technical Service Center (TSC) and the Bureau of Reclamation’s Office of Policy and Program Services (OPPS) jointly provided funding for development of the ESIM03 program and this document. In-kind assistance was also provided by the Office of Policy Analysis, U.S. Department of the Interior; the Office of Economics, U.S. Fish and Wildlife Service; and the U.S. Environmental Protection Agency, Region 10. iii This page intentionally blank. iv TABLE OF CONTENTS Page FORWARD ..................................................................1 INTRODUCTION .............................................................1 ELECTRICITY TERMS AND UNITS OF MEASURE ................................2 NERC AND THE WECC REGION ...............................................3 COMPONENTS OF THE ELECTRIC POWER SYSTEM .............................4 Generation Resources ....................................................4 Transmission and Distribution System .......................................5 Load ..................................................................6 Daily Load Pattern .................................................6 Weekly Load Pattern ...............................................7 Seasonal Load Pattern ..............................................8 Implications for Power System .......................................8 OPERATIONAL TERMS .......................................................9 Baseload Power .........................................................9 Load Following .........................................................9 INTRODUCTION TO POWERPLANT COSTS ....................................10 POWERPLANT OPERATION COSTS ...........................................11 ENGINEERING CHARACTERISTICS OF GENERATORS ..........................12 Responsiveness ........................................................12 Availability ...........................................................13 COORDINATED SYSTEM POWERPLANT OPERATIONS .........................14 EMISSIONS .................................................................15 ECONOMIC VALUE OF ELECTRIC POWER .....................................17 Demand ..............................................................17 Supply ...............................................................17 System Lambda (8) .....................................................18 ECONOMIC VALUE OF HYDROPOWER ........................................18 v VALUE OF WATER USED FOR PRODUCING HYDROPOWER .....................19 DEMAND SIDE MANAGEMENT (DSM) ........................................20 HYDROLOGY BASICS .......................................................20 RESERVOIR BASICS ........................................................21 RELEASE, HEAD AND GENERATION ..........................................23 STRATEGY FOR HOURLY OPERATION OF HYDROPOWER PLANTS ..............24 HYDROPOWER OPERATIONS AND AQUATIC RESOURCES ......................25 ENVIRONMENTAL CONSTRAINTS ON HYDROPOWER PLANTS ..................25 ABOUT THE ESIM03 PROGRAM ..............................................27 PURPOSE OF ESIM03 PROGRAM ..............................................27 ASSUMPTIONS AND SIMPLIFICATIONS .......................................27 INSTALLING THE ESIM03 PROGRAM .........................................28 Contents of the ZIP File ..................................................28 Computer Administration/Security Note .....................................28 ESIM03 QUICK START .......................................................29 HOW TO USE THE ESIM03 PROGRAM .........................................29 Hydro ................................................................30 Algorithm .............................................................31 Inputs ................................................................31 Reservoir .............................................................31 NGCCCT .............................................................32 Progress ..............................................................33 NGCCT ..............................................................33 Coal .................................................................33 Oil ..................................................................34 DSM .................................................................35 RUNNING THE PROGRAM AND INTERPRETING RESULTS ......................35 Hydro Graph ..........................................................35 vi Thermal Details ........................................................36 Hydro Details ..........................................................37 Emission Details .......................................................37 Emission Graph ........................................................38 Summary .............................................................38 Run Specs ............................................................39 Tech Graph ...........................................................41 Reservoir Graph ........................................................41