Cost of Regulatory Uncertainty in Air Emissions for a Coal-fired Power Plant"
Uncertainty about the extent and timing of changes in environmental
regulations for coal fired power plants makes the difficult problem of
selecting a compliance strategy even harder. Capital investments made today
under uncertainty can limit future compliance options or make them very
expensive. In this paper, we present a method for computing the cost of
operating a moderate-sized, coal-fired power plant under different conditions
of future regulatory uncertainty. Using a Multi-Period Decision Model (MPDM)
that captures the decisions (both capital investment and operating) that a
power plant owner must make each year, the framework employs a Stochastic
Optimization Model (SOM), nested in the MPDM to find the strategy that
minimizes the expected net present value (ENPV) of plant operations over a
fixed planning horizon. By comparing model runs under different uncertainty
conditions, the cost of regulatory uncertainty can be calculated.
PDF's are password protected. If you're a
first-time visitor and need a password, please click here.