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Financial and environmental impacts of new technologies in the energy sector




Duthu, Ray C., III, author
Bradley, Thomas H., advisor
Bandhauer, Todd M., committee member
Carlson, Kenneth H., committee member
Suryanarayanan, Siddharth, committee member

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Energy industries (generation, transmission and distribution of fuels and electricity) have a long history as the key elements of the US energy economy and have operated within a mostly consistent niche in our society for the past century. However, varieties of interrelated drivers are forcing changes to these industries’ business practices, relationship to their customers, and function in society. In the electric utility industry, the customer is moving towards acting as a fuller partner in the energy economy: buying, selling, and dispatching its demand according to its own incentives. Natural gas exploration and production has long operated out in rural areas farther from public concerns or regulations, but now, due to hydraulic fracturing, new exploration is occurring in more urbanized, developed regions of the country and is creating significant public concern. For these industries, the challenges to their economic development and to improvements to the energy sector are not necessarily technological; but are social, business, and policy problems. This dissertation seeks to understand and design towards these issues by building economic and life cycle assessment models that quantify value, potential monetization, and the potential difference between the monetization and value for two new technologies: customer-owned distributed generation systems and integrated development plans with pipeline water transport in hydraulically fractured oil and gas fields. An inclusive business model of a generic customer in Fort Collins, Co and its surrounding utilities demonstrates that traditional utility rates provide customers with incentives that encourage over-monetization of a customer’s distributed generation resource at the expense of the utilities. Another model which compares customer behavior incented by traditional rates in three New England cities with the behavior incented through a real-time pricing market corroborates this conclusion. Daily customer load peak-shaving is shown to have a negligible and unreliable value in reducing the average cost of electricity and in some cases can increase these costs. These models support the hypothesis that distributed generation systems provide much greater value when operated during a few significant electricity price events than according to a daily cycle. New business practices which foster greater cooperation between customers and utilities, such as a real-time price market with a higher fidelity price signal, reconnect distributed generation’s potential monetization to its value in the marketplace. These new business models are required to ensure that these new technologies are integrated into the electric grid and into the energy market in such a way that all of the market participants are interested and invested stakeholders. The truck transport of water associated with hydraulic fracturing creates significant local costs. A life cycle analysis of a hypothetical oil and gas field generic to the northern Colorado Denver-Julesburg basin quantifies the economic, environmental, and social costs associated with truck transport and compares these results with water pipeline systems. A literature review of incident data demonstrates that pipelines historically have spilled less hazardous material and caused fewer injuries and fatalities than truck transport systems. The life cycle analysis demonstrates that pipeline systems also emit less pollutants and cause less local road damage than comparable trucking systems. Pipeline systems are shown to be superior to trucking systems across all the metrics considered in this project. In each of these domains, this research has developed expanded-scope models of these new technologies and systems to quantify the tradeoffs that are present between monetization, environment, and economic value. The results point towards those business models, policies, and management practices that enable the development of more equitable, efficient, and sustainable energy systems.


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