Effects of Climate Change on Capacity Expansion Decisions of an Electricity Generation Fleet in the Southeast US

The electric power sector in the United States faces many challenges related to climate change. On the demand side, climate change could shift demand patterns due to increased air temperatures. On the supply side, climate change could lead to deratings of thermal units due to changes in air temperature, water temperature, and water availability. Past studies have typically analyzed these risks separately. Her; we developed an integrated, multimodel framework to analyze how compounding risks of climate-change impacts on demand and supply affect long-term planning decisions in the power system. In the southeast U.S., we found that compounding climate-change impacts could result in a 35% increase in installed capacity by 2050 relative to the reference case. Participation of renewables, particularly solar, in the fleet increased, driven mostly by the expected increase in summertime peak demand. Such capacity requirements would increase investment costs by approximately 31 billion (USD 2015) over the next 30 years, compared to the reference case. These changes in investment decisions align with carbon emission mitigation strategies, highlighting how adaptation and mitigation strategies can converge.

Automated summary

The study examines the impact of climate change on the electric power sector in the United States, showing that climate change could potentially increase risks on both the demand and supply sides simultaneously, significantly affecting long-term planning decisions. It was found that climate change impacts could result in an increase in installed capacity in the southeast U.S., driven mainly by an expected rise in peak demand during the summer, leading to higher investment costs over the next 30 years.