Essays on Regional Power System Investment: Value of Planning Model Enhancements, Transmission Generation Storage Co-optimization, and Border Carbon Adjustment

Abstract

This thesis is composed of three essays on power system planning models, which are models that identify what assets of transmission, generation, storage, and demand-management would be beneficial to invest (or retire) over a multidecadal time horizon for large geographic regions. In the first essay, I propose a framework to systematically evaluate the economic benefits of enhancements to planning models, facilitating meaningful comparisons among model enhancements. I test the framework in a transmission expansion planning (TEP) context for the western U.S. and compare four enhancements: (1) consideration of multiple scenarios of long-run policy, economy, and technology scenarios, (2) refined representations of short-run operational variability due to demand and variable energy resources, (3) refined power flow modeling, and (4) inclusion of generation unit commitment costs and constraints. Results show that the consideration of long-run uncertainties provides the most benefits, while benefits from the other three enhancements are relatively small. The interaction between storage and transmission can be both complementary and substitutive. In the second essay, to quantify the benefits of considering this interaction in TEP, I enhance the TEP model with storage expansion capability and test it in a planning context for the western U.S. Results show that the benefits of anticipating storage expansion in TEP increase when the assumed cost of building storage decreases but are sensitive to assumed carbon prices. Compared to the total value that storage can bring to the power system, the value of anticipating storage expansion in TEP can be significant, showing a strong impact from TEP decisions upon the profitability of storage investors. In the third essay, I use the TEP model to test the effectiveness of different border carbon adjustment policies in the western U.S. power system, in which California is a unilaterally regulates carbon emissions. The results show that charging electricity imports based on the facility-specific emission rate of the import contract can lead to substantial emissions leakage and even increases in total system emissions. Meanwhile, assuming the same emission rate across all electricity imports can partially mitigate leakage and result in small system-wide emissions reductions. Finally, basing the import emission rate on the marginal emission rate external to the carbon pricing regime can encourage a system-wide emission reduction, achieving the best economic efficiency