Influence of Deregulated Electricity Markets on Hydropower Generation and Downstream Flow Regime

Abstract

The flow regime of rivers is a complex but important measure of environmental quality and one that can be significantly impacted by conventional hydropower generation. While traditional hydropower scheduling creates a periodicity in downstream flows corresponding to seasonal and daily electricity demand patterns, deregulated electricity markets may provide financial incentives to further alter flows, as utilities respond to hourly market dynamics. This study investigates the potential for deregulated markets to impact both a hydropower utility’s revenue stream and downstream flow regimes. Six operating scenarios are explored: (1–2) full-market participation (including real-time energy), with and without flow reregulation; (3) day-ahead market only; and (4–6) run-of-river operations (ROR), with and without flood control and flow reregulation. Results suggest that, relative to a day-ahead-only scenario, the scale of any differences in flow regime resulting from full-market participation is relatively small compared to the additional revenue-generating potential of such a strategy. Implementing a run-of-river policy frequently yields “more natural” flow regimes than the day-ahead only scenario; but, in some cases these improvements are modest, and in others the ROR scenarios exacerbate deviation from unregulated flows. Regardless, the effects of implementing an ROR strategy come at a substantial cost in terms of foregone hydropower revenue.