I am clearly not a historian, but has there ever been a more dynamic, physically fit and forward-looking trio in charge of North America’s future? It’s not gender balanced, but hey, maybe we can fix that in November. At their recent summit, the TOP powerhouse (get it? Trudeau, Obama, Peña Nieto) announced that by 2025, 50 percent of the continent’s electricity will come from “clean” sources. Clean here means hydro, wind, solar, geothermal, CCS, demand reduction, and of course nuclear power. Currently these sources provide 37 percent of the three countries’ power. So this is an ambitious goal over a relatively short time horizon. It provides lots of flexibility to meet the goal, as Canada has ample potential hydro resources and Mexico’s solar potential is vast.
Don’t get me wrong, I am excited about this proposal, but I would like to take a step back. Climate change will affect the power sector in a number of ways. We have largely focused on reducing greenhouse gas emissions (mitigation), which is of course the root of the problem itself. Regulators outdo themselves with ambitious goals. California is going 80% below baseline by 2050! Everywhere you look there are sexy combinations of targets and timelines. Now it’s 50/25 for the electricity sector nationally! On this blog, my economics friends and I have argued repeatedly that it would be nice to set one GHG target and achieve it in a least-cost fashion, not in this game of mitigation bingo. Such a beautifully coordinated abatement effort across sectors and sources would make me happier than Kevin Durant moving to the Golden State Warriors.
Unfortunately some relative that clearly doesn’t get me, already got me “Mitigation Bingo” for my birthday. So I am going to spend the rest of my money on a game of “Adaptation Pursuit”. A comprehensive private and public sector plan on climate change for the power sector should look more broadly at what’s coming down the atmosphere and think of plans to deal with them. Many impacts of climate could make reducing greenhouse gas emissions more difficult. To clarify thoughts, I drew you the picture below (another reason no one likes economists is the fact that we can’t really draw).
The four plagues of the climate apocalypse in this context are fire (more frequent, and likely more intense), heat, floods (sea level rise) and drought (related to heat and in some areas less rainfall). Here are a number of ways these four will negatively affect the power sector:
1) Wildfires will affect transmission capacity. Lines do not like to get hot or dusty (fires generate a ton of dust). More fires may lead to lower transmission capacity at peak times. So maintenance and construction plans for existing and new transmission lines (which will ship those green electrons from the middle of nowhere to you) will have to take into account the new normal. Wildfires may also affect substation and generation facilities directly, of course.
2) Many power plants are built near bodies of water, which is needed for cooling. Sea level rise will lead to higher flood events, which might negatively affect these plants and substations and require investments in additional seawalls. Or maybe one would want to build plants elsewhere.
3) Nuclear power plants are also frequently located near the ocean. As we lack permanent storage deep underground for spent fuel rods in the US, spent fuel rods live in secure facilities at the plants. If sea levels rise, and the higher 100-year flood events change the new normal, we have to think about storage more carefully in the intermediate run. In the very long run, if there is really drastic sea level rise, the value of deep underground storage goes up.
4) As we have recently experienced, droughts are bad for California and just about everywhere else. In agricultural areas, drought is fought by pumping water from wells, which requires lots of energy (e.g., electricity or diesel). If in the long run we have to drill deeper and deeper for water, these energy costs will rise.
5) As streams and small rivers run dry and hot during drought periods, this may lead to insufficient supplies of cooling water necessary for both fossil and nuclear power plants. Nobody likes to think about overheating power plants. Of course, less water in streams is bad for hydropower generation as well.
6) But the big Kahuna is heat. The biggest economic impacts will likely come from increased demand for cooling during hot days. Lucas, Catherine and I have written extensively on the subject. More people will install air conditioners and operate them more frequently. The big costs here are from more electricity consumption. Given the possibly sizable necessary investments in peak capacity, which costs about $750 per kW, higher demand during peak load will be a pricey endeavor.
7) We already know that transmission lines lose capacity at high temperatures. But on top of that some types of gas fired power plants generate less power per unit of gas. This means that when it’s hot outside, not only is demand higher, but many plants see decreases in output.
None of these seven points require us to reach for our anti-anxiety medication. There is time to address all of these issues. Which is what the average 20 year old thinks in terms of heart conditions while biting into a triple bacon cheeseburger. It’s time to come up with a comprehensive plan on how we are going to deal with these issues and act accordingly. This will save us a lot of headaches later on.