Generation

The essay sets out what electric markets might look like if the pricing proposed in value of solar studies were adopted for every resource.

 

Mall, Amy. Environmental Impacts of Oil and Gas Production. Presentation to the Harvard Electricity Policy Group's Fifty-Seventh Plenary Session. Austin, TX. December 10, 2009. 32 pages.

Brown, Garry. Shale Shock: The Revolution in Shale Gas Recovery, Electricity Markets the Green Agenda. Presentation to the Harvard Electricity Policy Group's Fifty-Seventh Plenary Session. Austin, TX. December 10, 2009. 12 pages.

Bahorich, Michael. America's New Natural Gas. Presentation to the Harvard Electricity Policy Group's Fifty-Seventh Plenary Session. Austin, TX. December 10, 2009. 22 pages.

This paper describes a 3 Party Covenant financing and regulatory program aimed at reducing financing costs and providing a risk-tolerant investment structure to stimulate initial deployment of five to ten Integrated Gasification Combined Cycle (IGCC) coal generation power plants during this decade. The 3 Party Covenant is an arrangement between the federal government, state Public Utility Commission (PUC), and equity investor that serves to lower IGCC cost of capital by reducing the cost of debt, raising the debt/equity ratio, and minimizing construction financing costs. The 3 Party Covenant would reduce the cost of capital component of energy costs from new IGCC facilities by 34 percent and the overall cost of energy about 20 percent, making the technology cost competitive with pulverized coal (PC) and natural gas combined cycle (NGCC) generation.

Concerns about high natural gas prices, environmental emissions, economic growth and future coal production have catalyzed a growing interest in developing and deploying advanced coal gasification technologies both in the United States and abroad. On February 11, 2004, two of the Kennedy School’s centers, the Belfer Center for Science and International Affairs and the Center for Business and Government, sponsored a workshop on the political and financial challenges to the deployment and commercialization of these technologies. The purpose of the workshop was to identify issues that require additional scrutiny and to build a policy foundation for the commercialization of Integrated Gasification Combined Cycle (IGCC) technologies for power production. Additional sponsors included the Environmental Protection Agency, the U.S. Department of Energy’s National Energy Technology Laboratory, the Center for Clean Air Policy, and the National Commission on Energy Policy.

Concerns about high natural gas prices, environmental emissions, economic growth and future coal production have catalyzed a growing interest in developing and deploying advanced coal gasification technologies both in the United States and abroad. On February 11, 2004, two of the Kennedy School’s centers, the Belfer Center for Science and International Affairs and the Center for Business and Government, sponsored a workshop on the political and financial challenges to the deployment and commercialization of these technologies. The purpose of the workshop was to identify issues that require additional scrutiny and to build a policy foundation for the commercialization of Integrated Gasification Combined Cycle (IGCC) technologies for power production. Additional sponsors included the Environmental Protection Agency, the U.S. Department of Energy’s National Energy Technology Laboratory, the Center for Clean Air Policy, and the National Commission on Energy Policy.

Attendees included senior officials from the energy industries, state regulators, federal officials, senior members of the NGO community and several experts from academia. This report summarizes the major issues and arguments put forth in each of the three panel discussions, a keynote presentation, and a luncheon speech. Since all statements made at the workshop are off-the-record, none of the remarks are directly attributed to any participant. This report is a general summary and does not cover all the issues discussed, but rather focuses on those of the greatest significance or greatest controversy. The arguments and positions described in this report do not necessarily reflect those of the John F. Kennedy School, the workshop sponsors, or any individual participant at the workshop.

Excerpt from theIntroduction:

The era of electric and natural gas industry restructuring ushered in by Congress and implemented by FERC and state public utility commissions has now been in place for more than five years. In the wake of these momentous shifts in regulatory policy, electric and gas companies have responded with fundamental changes in their business strategies. Some have decidedly “stuck to their knitting,” while others have merged, sold assets, invested overseas and in new businesses, and in some cases completely abandoned their historic business roots. With the economic downturn, the collapse of merchant generators and the decided slowdown in industry restructuring, the time is opportune to examine corporate winners and losers from this unprecedented round of industry restructuring.

Winners and losers in the battle of restructuring can be measured from a variety of perspectives. The major constituents, however, are clearly shareholders and investors on one hand and consumers on the other. The focus of this analysis is the shareholder. In examining the impacts on shareholders, we look to a variety of related metrics that speak to financial performance.

Our analysis focuses on total shareholder return for the group of 64 companies that compose the Fortune 1000 energy companies.2 Within this mix is a combination of utilities, pipelines, energy merchants and independent generators with diverse business strategies. Aligning companies with their returns to shareholders paints a dramatic picture of widely differentiated financial performance. The degree of variation is particularly notable in light of an industry once noted for its stable returns appealing to the most conservative investors.

This essay discusses U.S. energy policy and the associated evolution of energy supply, energy demand, energy prices and the industrial organization of the domestic energy industries during the period 1991 through 2000. This period covers the last two years of the George H. W. Bush administration and the entire Clinton administration. It begins with an “energy crisis” stimulated by the invasion of Kuwait and the subsequent Gulf War and ends with an “energy crisis” caused by significant increases in oil and, especially, natural gas prices, the collapse of California’s new competitive electricity markets and the threat of electricity shortages throughout the Western U.S. Both “energy crises” led the sitting Presidents’ administrations to develop national energy strategies and to try to convince Congress to enact comprehensive energy legislation to implement them. Neither “energy crisis” had the severe economic impact or led to the kinds of dramatic, and often ill-conceived, policy responses observed following the two oil shocks of the 1970s. The 1990-91 “energy crisis” was short-lived and interest in energy policy soon faded. It would not be surprising if the latest “energy crisis” follows a similar course.

Flaim, Theresa. Are Retail Markets Working? ‰ÛÓ Part Deux. 1 February 2001. Presentation, 18 pages.

California Public Utilities Commission. Rulemaking on the Commission's Own Motion to Assess and Revise the Regulatory Structure Governing California's Natural Gas Industry. Filed Public Utilities Commission, January 21, 1998. San Francisco Office. R.98-01-011.

The Environmental Protection Agency issued a final rule that defines a broad and complicated set of standards for controlling carbon dioxide (CO2) emissions from affected electricity generating units. (Environmental Protection Agency, 2015b) The proposed national average reduction by 2030 is 32% from the 2005 level of emissions, about half of which has already occurred. (Environmental Protection Agency, 2015j) The rules for new power plants are relatively straightforward and imply little more than reinforcing the current economic choice of natural gas over coal fired generation, given current projections for the price of natural gas. The Clean Power Plan rules for existing power plants arise under a different section of the Clean Air Act and present a more complicated picture. The result has implications for the nature and degree of future limitations on carbon dioxide emissions from the electricity sector. In addition, some versions of the possible implementation plans could have material implications for the operations of Regional Transmission Organizations under the regulations of the Federal Energy Regulatory Commission. The purpose here is to highlight some of the possible directions for relevant policies of electricity system operators.

Allen, Bill. Maintaining Resource and Price Diversity in a Competitive Market." Presentation to the Harvard Electricity Policy Group 77th Plenary Session, New Orleans, LA, December 2014."

O'Neill, Richard. Diversity Challenges in Electricity Markets." Presentation to the Harvard Electricity Policy Group 77th Plenary Session, New Orleans, LA, December 2014."

Linde, Tamara. Keeping the Lights On: Security Priorities for the 21st Century." Presentation to the Harvard Electricity Policy Group 75th Plenary Session, Cambridge, MA, June 2014."

Kelly, Susan. Thinking Outside the Capacity "Markets" Box: Resource Adequacy Reconsidered: Mandates and Markets." Presentation to the Harvard Electricity Policy Group 77th Plenary Session, New Orleans, LA, December 2014."

Keppler, Jan Horst. First Principles, Market Failures and Endogenous Obsolescence: The Dynamic Approach to Capacity Mechanisms." Chaire European Electricity Markets, Universit̩ Paris-Dauphine, November 2014."

Makovich, Lawrence. The Value of US Power Supply Diversity." Presentation to the Harvard Electricity Policy Group 77th Plenary Session, New Orleans, LA, December 2014."

American Public Power Association. Power Plants Are Not Built on Spec: 2014 Update." 2014."

The Brattle Group. Estimating the Economically Optimal Reserve Margin in ERCOT." Prepared for the Public Utility Commission of Texas. January 31, 2014."

Edelston, Bruce. ‰ÛÏResource Adequacy Reconsidered: Mandates and Markets. Presentation to the Harvard Electricity Policy Group 77th Plenary Session, New Orleans, LA, December 2014."

ERCOT. About the Operating Reserve Demand Curve and Wholesale Electric Prices." May, 2014."