Regional energy markets and the cost of natural flow dam operation

Abstract

With the proliferation of electricity markets for the purchase and sale of firm and non-firm power and capacity, the possibility exists for using trade in these commodities to minimize the cost impact of operating dams to restore downstream flows to pre-dam patterns-so called Run of River (ROR) dam operation.We examine the impact of such markets on the incremental costs of ROR operation relative to least cost operation via a stochastic, dynamic optimization model. We identify features of the dam structure and of the economic environment that are critical to achieving ROR operation at modest incremental cost. © The Author(s) 2011.