Environmental Engineering Reference
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wet and dry) cooling which greatly reduces water consumption. The Silverhawk combined
cycle plant in Nevada is an example of dry cooling.
29.3.2 Economic Risks
Conventional power plants are subject to several economic risks.
• Fuel price risk. The fuel for natural gas-ired power generation has exhibited wild
fluctuations in price since the early 1970s (Figure 29.3).
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Consequently, use of
gas-fired power generation exposes power plant owners, utilities, and electricity
consumers to periods of potentially high costs.
• Environmental regulation compliance cost risk. Coal-ired power plants face
potentially significant costs to reduce emissions to meet environmental regula-
tions. This is especially the case for complying with potential limitations on
carbon dioxide emissions; future compliance costs may exceed fuel costs.
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In addi-
tion, the Environmental Protection Agency is considering Best Available Retrofit
Technology for power plants in Arizona and New Mexico to reduce emissions of
nitrogen oxides and particulate matter so as to improve visibility and is consider-
ing further regulation to reduce other environmental impacts of power genera-
tion. Compliance could be expensive, costing hundreds of millions of dollars.
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• Financial risk. Obtaining inancing for an investment in a new power plant is
difficult today, even under favorable circumstance. If investors calculate that a
power plant developer or utility may not fully recover its costs, then financing may
not be possible. Impediments to full cost recovery include potential regulatory
disallowances for imprudent investments that, for example, did not take account
of the risks of environmental regulatory costs or fuel price volatility. In addition,
future sales of electricity are subject to uncertainty, and new power plants might
represent excess generating capacity whose costs might not be fully recovered.
$10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
FIGURE 29.3
Natural gas prices paid by electric power sector.
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