Power System Responses to Complex Environmental Policy and Incentives under Restructuring: Models and Analyses of Policy Interactions, Effectiveness, and Efficiency

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Power System Responses to Complex Environmental Policy and Incentives Under Restructuring:Models and Analyses of Policy Interactions, Effectiveness, and EfficiencyBenjamin F. Hobbs and Catherine S. NormanDepartment of Geography & Environmental EngineeringThe Johns Hopkins UniversityBaltimore, MD 21218Environmental statutes and regulations have greatly impacted power sector design, costs, and emissions. Policies focusing on particular problems or technologies can reinforce or contradict each other. This research addresses two questions: How can the overlapping effect of multiple environmental policies and incentives be captured in models of power system operations, planning, and markets? How might environmental policies interact with power market designs to affect operations and investment, and the resulting economic efficiency and emissions of the electric power sector? The particular issues to be analyzed are: the cumulative effect of multiple policies and incentives on generation investment and operations; the impact of inconsistent policies in different jurisdictions within the same power market; and risks of distorted generation investment stemming from alternative emissions rights allocations. The research tasks consist of: development of appropriate power systems operations and planning models at both the firm and market levels; estimation of relevant parameters for markets in PJM and northwest Europe; and application of the models to the research questions. Previous analyses of effects of environmental policies have either used very simplified models of generation technology and/or have considered one or two policies in isolation. The intellectual merit of the proposed work consists of: the development of power system models to consider the full range of environmental incentives that power market participants face; this unique marriage of power systems and economic modeling will permit more realistic analyses of the cumulative effects of policies. Broader impacts include improved understanding of the effects of power sector policies and market designs as well as recommendations for improvement; more realistic representations of these policies in power system models; and cross-disciplinary training of students in power systems, economics, and environmental policy. The proposers' research group has a proven record of graduating female and underrepresented minority Ph.Ds.