Document Type:Technical Results
This Product is publicly available
Climate policy represents a fundamental uncertainty for electricity generating companies. Although many analyses are available, the timing and stringency of domestic climate policies are unknown and will likely be dependent upon the actions of other countries. The outcomes of these deliberations can dramatically change the return on generation investments. Today, many electric companies are actively considering substantial investments in new capacity. The technology choices these companies make and the financial return on investments are integrally tied to future environmental policies and, in particular, to climate policy. This report presents a conceptual framework for evaluating how climate policy leading to a price on CO2 emissions would affect the cash flows of generating assets. The conceptual framework is illustrated with many examples drawn from data for the ECAR-MAIN region of the U.S. power market. The examples demonstrate how a price on CO2, changing prices of natural gas, and additions of new generating capacity impact the economics of existing generation and proposed additions of new generation. The report concludes with an analysis of how CO2 prices affect incentives for new non-emitting generation and the corresponding effect on emissions.
For further information about EPRI, call the EPRI Customer Assistance Center at (800) 313-3774 or email email@example.com