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Adaptation of thermal power plants: The (ir)relevance of climate (change) information

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  • Bogmans, Christian W.J.
  • Dijkema, Gerard P.J.
  • van Vliet, Michelle T.H.

Abstract

When does climate change information lead to adaptation? We analyze thermal power plant adaptation by means of investing in water-saving (cooling) technology to prevent a decrease in plant efficiency and load reduction. A comprehensive power plant investment model, forced with downscaled climate and hydrological projections, is then numerically solved to analyze the adaptation decisions of a selection of real power plants. We find that operators that base their decisions on current climatic conditions are likely to make identical choices and perform just as well as operators that are fully ‘informed’ about climate change. Where electricity supply is mainly generated by thermal power plants, heat waves, droughts and low river flow may impact electricity supply for decades to come.

Suggested Citation

  • Bogmans, Christian W.J. & Dijkema, Gerard P.J. & van Vliet, Michelle T.H., 2017. "Adaptation of thermal power plants: The (ir)relevance of climate (change) information," Energy Economics, Elsevier, vol. 62(C), pages 1-18.
    • Handle: RePEc:eee:eneeco:v:62:y:2017:i:c:p:1-18
    DOI: 10.1016/j.eneco.2016.11.012
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    3. Araujo, Rafael, 2024. "The value of tropical forests to hydropower," Energy Economics, Elsevier, vol. 129(C).
    4. Steinhäuser, J. Micha & Eisenack, Klaus, 2020. "How market design shapes the spatial distribution of power plant curtailment costs," Energy Policy, Elsevier, vol. 144(C).
    5. Pengbang Wei & Yufang Peng & Weidong Chen, 2022. "Climate change adaptation mechanisms and strategies of coal-fired power plants," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(8), pages 1-22, December.

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    More about this item

    Keywords

    Thermal power plants; Climate change; Adaptation; Real options;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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