Coordinating power sector climate transitions under policy uncertainty

Area of Science:

• Energy Policy
• Climate Change Mitigation
• System Dynamics

Background:

• Effective climate policy necessitates coordination across political jurisdictions with varying institutional structures and interest groups.
• Realistic coordination barriers and policy heterogeneity significantly impact optimal low-carbon electricity pathways.

Purpose of the Study:

• To model the effects of coordination barriers and policy heterogeneity on optimal low-carbon electricity pathways in the western United States.
• To analyze the influence of different coordination mechanisms on power system costs and infrastructure development.

Main Methods:

• Utilized a capacity expansion model incorporating operational and coordination mechanism details.
• Estimated aggregate costs for fully coordinated versus baseline power systems.
• Analyzed the impact of regional coordination on infrastructure investments, including transmission, energy storage, and renewable energy.

Main Results:

• Aggregate cost reductions for fully coordinated power systems were modest (a few percent) compared to baseline levels.
• State-level cost differences due to coordination varied significantly, by up to an order of magnitude.
• Enhanced transmission networks were observed under complementary coordinating policies, facilitating trade.
• Location-dependent investments like energy storage and renewables were more sensitive to the degree of market coordination.
• Firm low-carbon capacity deployment was primarily driven by policy stringency and cost/availability assumptions, with limited impact from regional coordination.

Conclusions:

• Climate and energy models must incorporate the political feasibility of market and policy coordination levels when assessing optimal pathways.
• While full coordination offers limited aggregate cost benefits, it is crucial for developing trade-enabling infrastructure.
• Policy stringency and economic factors are more critical drivers for firm low-carbon capacity than the degree of regional coordination.