ENDOGENOUS ADOPTION DECISIONS OF COAL-BIOMASS CO-FIRING: AN EQUILIBRIUM FRAMEWORK APPROACH
Open Access
- Author:
- Valqui Ordonez, Brayam D
- Graduate Program:
- Energy and Mineral Engineering
- Degree:
- Master of Science
- Document Type:
- Master Thesis
- Date of Defense:
- March 23, 2018
- Committee Members:
- Mort D Webster, Thesis Advisor/Co-Advisor
Karen Ann Fisher-Vanden, Committee Member
Seth Adam Blumsack, Committee Member - Keywords:
- Electricity Market
Biomass co-firing
Nash Equilibrium
Coal Plants
Endogenous decisions
MISO
Renewable Portfolio Standards - Abstract:
- Biomass co-firing technology with coal is an alternative means to achieving Renewable Portfolio Standards (RPS) that could also extend the life of coal-fired power plants. This approach is particularly attractive in regions where there is a considerable potential supply of biomass and where a high share of electricity generation capacity comes from coal plants. An RPS that allows for biomass co-firing could provide an incentive for some plants that otherwise would not co-fire. In order to properly assess the likely response of coal units in a region requires taking into consideration competition among coal plants and other generation sources. Further, such an analysis would require estimating biomass local availability, which is heterogeneous across different areas, and could drive up its price, making co-firing not economic feasible for some plants. In this thesis, I present a holistic framework allowing for endogenous adoption decisions of whether a plant chooses to co-fire or not. This framework is composed of a detailed power system that determines hourly output at each power plant while accounting for real world operational constraints (Unit Commitment Model) and a game-theoretic model that solves for a stable equilibrium among power plants competing for biomass. As a case study, I apply this framework to the Midcontinent Independent System Operator (MISO), where many states have an existing RPS and where there is a high potential to obtain corn residue as a biomass. I simulate a co-firing rate under a broad range of carbon prices, which act as a RPS that includes biomass, and numerically solve for the Nash Equilibrium; i.e., none of the competing coal plants would unilaterally change their decisions whether to co-fire with biomass.