Optimal investment in electric generating capacity under climate policy

Mitigating climate change will require reduced use of fossil fuels to generate electricity. To do so while eschewing nuclear power, countries have turned to wind and solar energy. In this paper, load duration and screening curves are used to investigate the extent to which a jurisdiction should invest in intermittent (solar and wind) sources of energy, gas and nuclear power. The application is to the Alberta electricity grid because it is nearly 90 percent reliant on fossil fuels, particularly coal, and recent policy intends to eliminate coal generating capacity by 2030 and replace two-thirds of the lost capacity with renewables. Results suggest that solar and wind are unable to replace two-thirds of coal generation, and that larger than anticipated investments in natural gas capacity will be required. However, if Alberta is serious about reducing emissions, it will need to rely on nuclear energy; at high carbon prices, nuclear power could reduce CO₂ emissions by some 95% compared to only 55% when relying totally on solar and wind.