, Volume 2, Issue 3-4, pp 325-357,
Open Access This content is freely available online to anyone, anywhere at any time.
Date: 06 Nov 2011

Regional energy markets and the cost of natural flow dam operation

Abstract

With the proliferation of electricity markets for the purchase and sale of firm and non-firm power and capacity, the possibility exists for using trade in these commodities to minimize the cost impact of operating dams to restore downstream flows to pre-dam patterns—so called Run of River (ROR) dam operation. We examine the impact of such markets on the incremental costs of ROR operation relative to least cost operation via a stochastic, dynamic optimization model. We identify features of the dam structure and of the economic environment that are critical to achieving ROR operation at modest incremental cost.

The authors thank: (a) Gregory Thomas of the Natural Heritage Institute for first making us aware of the problem; (b) Dick Fisher of Voith Siemens Corporate Engineering in York, Pennsylvania for useful insights into the costs of adding generating units to existing hydro-electric structures; (c) Brian Shenk of the Army Corps of Engineers Hydropower Analysis Center in Portland, Oregon for making us aware of the work the Corps is doing in the evaluation of generating additions to existing facilities, in particular, to the Corps Libby Dam complex in Northern Montana; (d) Douglas G. Hall of the U.S. Department of Energy’s Idaho National Laboratory’s Wind and Hydropower Technologies Program for input on the discussion of Hydropower Capacity Increase Opportunities in the U.S.