Electricity - WITCH
|Institution||European Institute on Economics and the Environment (RFF-CMCC EIEE), Italy, http://www.eiee.org.|
|Solution concept||General equilibrium (closed economy)|
Electricity is generated by a series of traditional fossil fuel-based technologies and carbon-free options. Fossil fuel-based technologies include natural gas combined cycle (NGCC), fuel oil and pulverised coal (PC) power plants. Coal-based electricity can also be generated using integrated gasification combined cycle production with carbon capture and sequestration (CCS). Low carbon technologies include hydroelectric and nuclear power, renewable sources such as wind turbines and photovoltaic panels (Wind&Solar) and two breakthrough technologies.
All the main technology features are represented: yearly utilisation factors, fuel efficiencies, investment, and operation and maintenance costs. For CCS, supply costs of injection and sequestration reflect sites? availability at the regional level, as well as energy penalty, capture and leakage rates. IGCC-CCS competes with traditional coal which is replaced for a sufficiently high carbon price signal. For nuclear power, waste management costs are also modeled, but no exogenous constraint is assumed. Hydroelectric power is assumed to evolve exogenously to reflect limited site availability. Breakthrough in power generation technologies is modelled by introducing a backstop technology, that can be better thought of as a compact representation of a portfolio of advanced technologies that can substitute nuclear power.
The cost of electricity generation is endogenous and it combines capital costs, O&M expenditure and the expenditure for fuels.
Despite the detailed description of the power generation sub-sector, not all types of power plants are modeled explicitly in WITCH (for instance, the model does not distinguish gas with no combined cycle). We therefore assume the standard use of factors for new power plants. This assumption helps us to avoid accounting difficulties for multi-fuel and marginal power plants. Efficiency of fuel consumption in power generation plants are close to the implied values in the new Enerdata database. Following recent debates over the technical feasibility, the investment costs for Integrated Gasification Combined Cycle (IGCC) technologies is 3170 US$ 2005/kW.
We assume the average efficiency of gas and coal power plants improves autonomously to 60% and 45%, respectively, over the next decades. Similarly, the utilisation factor of Wind&Solar is assumed to increase from 2500 to 3500 hours per year within a 30-year time frame.
Costs for new investments and maintenance in power generation are region-specific and constant over time, but for renewables and backstop technologies. Investment costs in renewable energy decline with cumulated installed capacity at the rate set by the learning curve progress ratios, which is equal to 0.87 ? i.e. there is a 13% investment cost reduction for each doubling of world installed capacity.
Electricity production is described by a Leontief production function that combines generation capacity, fuels and expenditure for operation and maintenance (O&M) in a Leontief production function. The fixed proportions used to combine the three inputs (two in the case of wind and solar electricity generation which does not need any fuel input) have been derived by plant operating hours, fuel efficiencies and O&M costs and are constant across regions and across time. The parameters governing the production function take into account the technical features of each power production technology, such as the low utilisation factor of renewables, the higher costs of running and maintaining IGCC-CCS and nuclear plants.