Imagine you are the owner of a portfolio of electricity generation assets in California with a total average annual production of 485,000 MWh. The State legislature has been considering a bill involving the Cap & Trade market and you see the writing on the wall that the bill will likely get passed, which would cause a 500% increase in the cost of carbon dioxide production from the current permit price of $5/ton CO2-eq. On an average annual production basis, your portfolio consists of 12% solar PV, 5% onshore wind, 9% geothermal, 45% combined cycle gas turbine (CCGT), and 29% conventional gas turbine (CGT) generation. Assume only use-phase emissions.
Given the O&M and fuel cost in the table below, what would be the percent change in annual operating costs of the portfolio if the bill were to pass? Assume the CGT assets to be 33% efficient and the CCGT to be 54% efficient on average; natural gas emits 0.053 tons of CO2 per MMBTU; and the cost of natural gas is $3.13/MMBTU. The current permit price is included in the fuel cost.
|
Asset (averaged per type) |
O&M ($/MWh) |
Fuel ($/MWh) |
Total ($/MWh) |
|
CCGT |
$16.00 |
$21.46 |
$37.46 |
|
CGT |
$14.00 |
$35.11 |
$49.11 |
|
Geothermal |
$9.00 |
$0.00 |
$9.00 |
|
Solar PV |
$1.50 |
$0.00 |
$1.50 |
|
Wind |
$2.75 |
$0.00 |
$2.75 |
Current Cost (per MWh) :
Asset type Proportion Total Cost(per MWh) Proportional Cost ( 2 * 3)
(1) (2) (3) (4)
CCGT .45 $37.46 $16.8570
CGT .29 $49.11 $14.2419
GEOTHERMAL .12 $9.00 $1.0800
SOLAR PV .09 $1.50 $0.1350
WIND .05 $2.75 $0.1375
Operating Cost (per MWh) $32.4514
Increase in Fuel Cost (Per MWh) after passing of Bill = ($5 per Ton of CO2 * .053 ton CO2 per MMBTU) * 500%
= $1.325
Natural gas is used in CCGT and CGT unit, so the total cost per MWh of these units shall be increased by $1.325
Revised Cost (per MWh) :
Asset type Proportion Total Cost(per MWh) Proportional Cost ( 2 * 3)
(1) (2) (3) (4)
CCGT .45 $38.7850 $17.4533
CGT .29 $50.4350 $14.6262
GEOTHERMAL .12 $9.0000 $1.0800
SOLAR PV .09 $1.5000 $0.1350
WIND .05 $2.7500 $0.1375
Operating Cost (per MWh) $33.4320
% change in annual Operating cost of Portfolio = (33.432 - 32.4514) / 32.4514 * 100
= .9806/32.4514 * 100
= 3.02%
Imagine you are the owner of a portfolio of electricity generation assets in California with a...