There is strong debate over whether and how to regulate CO2 emissions from the electric sector and consensus seems unlikely in the near future. At the same time, electric companies have to make generation capacity investment decisions today that could last for 60 years, during which time CO2 policy could change dramatically. For example, a gas-fired unit built today may face a price on CO2 at some unspecified time in the future which will increase the cost of dispatching that unit. Under what conditions should an electric utility build low-CO2-emitting generation capacity today, even if it is not the lowest-cost alternative in today’s policy environment? This technical brief summarizes the results of research on this question by the Electric Power Research Institute’s (EPRI) Program 201-B.
Authors Nidhi R. Santen and David Young