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Overview of Energy-Overview of Energy-Environment ModelingEnvironment Modeling
MS&E 290: Public Policy MS&E 290: Public Policy AnalysisAnalysis
February 22, 2005February 22, 2005
AgendaAgenda
Energy System DiagramsEnergy System Diagrams Process Engineering and Levelized CostsProcess Engineering and Levelized Costs Resource Supply and Fuel DemandsResource Supply and Fuel Demands Equilibrium and WelfareEquilibrium and Welfare Economy-Wide FeedbacksEconomy-Wide Feedbacks
ResourceExtraction
Refiningand
ConversionTransport Generation
Transmissionand
Distribution
UtilizingDevice End Use
Example Energy System DiagramExample Energy System Diagram
Solid
Gas
Liquid
Misc. Electric-BuildingMisc. Electric - IndustrialOffice EquipmentAir ConditioningWater HeatSpace Heat
Electric
Process HeatPetrochemicalsPassenger TravelOther Transport
Renewables
Nuclear
Coal
Natural Gas
Crude Oil
Pipeline
Pipeline DG
DG
DGlHydrogen
Ethanol
Generic Types ofGeneric Types of Energy/Environment Policy Models Energy/Environment Policy Models
Process EngineeringProcess Engineering Individual Technologies RepresentedIndividual Technologies Represented Need to Add in Market and Economy Wide EffectsNeed to Add in Market and Economy Wide Effects
Energy Market ModelsEnergy Market Models Bring in Energy Market FeedbacksBring in Energy Market Feedbacks Weaker on Technology & EconomyWeaker on Technology & Economy
General Equilibrium ModelsGeneral Equilibrium Models Bring in Economy-Wide FeedbacksBring in Economy-Wide Feedbacks Weaker on Energy Markets and TechnologyWeaker on Energy Markets and Technology
Process Engineering Example:Process Engineering Example:Choice of Electric Power PlantsChoice of Electric Power Plants
Process Analysis: Basic Cost Process Analysis: Basic Cost DataData
Capital Capital CostCost
Fixed Fixed O&M O&M CostCost
Variable Variable O&M O&M CostCost
FuelFuel
TechnologyTechnology ($/kW)($/kW) ($/kW)($/kW) ($/($/kWhr)kWhr)
($/($/Mbtu)Mbtu)
NuclearNuclear 19251925 60.8460.84 .00045.00045 0.430.43CoalCoal 11221122 25.5125.51 .00319.00319 1.271.27Gas CCGas CC 586586 10.6310.63 .00212.00212 3.43.4Gas CTGas CT 457457 8.58.5 .00319.00319 3.43.4Solar PVSolar PV 35263526 10.4710.47 00 00Solar Solar ThermalThermal
22932293 50.8850.88 00 00
WindWind 976976 27.1527.15 00 00
Process Analysis: Basic Performance Process Analysis: Basic Performance DataData
Years to Years to ConstrucConstructt
Plant Plant Size Size
Ave.Ave.
CapacitCapacityy
FactorFactor
Heat RateHeat Rate
TechnologyTechnology (Years)(Years) (MW)(MW) (%)(%) (Mbtu/(Mbtu/KWhr)KWhr)
NuclearNuclear 55 600600 9090 1040010400CoalCoal 44 400400 8585 90009000Gas CCGas CC 33 400400 8585 70007000Gas CTGas CT 22 120120 3030 93949394Solar PVSolar PV 22 55 2525 1028010280Solar Solar ThermalThermal
33 100100 2525 1028010280
WindWind 33 5050 2929 1028010280
Levelized Cost = I*CRF + O&M + FQ Q Q
Where: I = Capital investment, including financing.CRF = Capital Recovery FactorO&M = Fixed and variable O&M F = Fuel cost Q = Annual plant output (kWhr)
CRF = rn(1 + r)n
(1+r)n – 1
r = real discount rate (like interest rate)n = plant life
Levelized Generation Cost Methodology
Levelized Cost Comparison for Electric Power Generation
0
0.05
0.1
0.15
0.2
0.25
Nuclear Coal Gas CC Gas CT Solar PV SolarThermal
Wind
Generation Technology
Do
llars
per
kilo
Wa
tt H
ou
r (i
n 2
003
Do
llars
)
Fuel
Variable O&M
Fixed O&M Charges
Capital Charges
Levelized Cost Comparison for Electric Power GenerationWith $100 per Ton Tax on Carbon
0
0.05
0.1
0.15
0.2
0.25
Nuclear Coal Gas CC Gas CT Solar PV SolarThermal
Wind
Generation Technology
Do
llars
per
kilo
Wa
tt h
ou
r (i
n 2
003
US
Do
llars
)
Carbon Tax
Fuel
Variable O&M
Fixed O&M Charges
Capital Charges
ResourceExtraction
Refiningand
ConversionTransport Generation
Transmissionand
Distribution
UtilizingDevice End Use
Example Energy System DiagramExample Energy System Diagram
Solid
Gas
Liquid
Misc. Electric-BuildingMisc. Electric - IndustrialOffice EquipmentAir ConditioningWater HeatSpace Heat
Electric
Process HeatPetrochemicalsPassenger TravelOther Transport
Renewables
Nuclear
Coal
Natural Gas
Crude Oil
Pipeline
Pipeline DG
DG
DGlHydrogen
Ethanol
X X
X X
X X X
CostPe
S
Cumulative Supply SuQe
Resource Supply CurvesResource Supply Curves
Demands for Energy FuelsDemands for Energy Fuels
X X
X X
X X
X X
D
Cost
Demand or Qc
Demand for Oil
Price
Quantity
Demand or Willingness to Pay
Gain in Consumers’ Surplus From Price Drop
Supply of Oil
Price
Quantity
Supply or Cost of Resource Extraction
Producers’ Surplus Loss From Price Drop
Supply/Demand EquilibriumIn Oil Market
Price
Quantity
Demand or Willingness to Pay
Supply or Cost of Resource Extraction
Supply/Demand Equilibrium Maximizes Consumers’ Plus Producers’ Surplus
Assessing Economy Wide Feedbacks:Assessing Economy Wide Feedbacks:Using Economy-Wide Production Using Economy-Wide Production
FunctionsFunctions
Output
Energy Primary Factors
Labor Capital
ElectricityFossil Fuels
IntermediateGoods
FuelGoods
CarbonRights
Y = F(K,L,E,M)
Some Additional Issues In Some Additional Issues In Energy-Environmental Energy-Environmental
ModelingModeling Technology DevelopmentTechnology Development
EndogenousEndogenous Policy DrivenPolicy Driven
International TradeInternational Trade International SecurityInternational Security