| Assessing the Economic Impact of Climate Change – National Case Studies |
tion system fixed. Whilst long-run models can do this (usually at a larger time step) and they can also simulate investment in new capacity and distribution. The country has both kinds of models. The short-run model, OPTimization Model (OPTIM) (Causevski and Bosevski, 2003 and 2004), is very interesting because it simulates the operation of all hydro-reservoirs and associated hydropower plants and run-of-river hydropower plants in the country on variable time steps, as short as an hour over a period of one year. It also simulates the operation of all other types of power plants (thermal, fossil fuel). In the model, the hourly and daily loads over the year are fixed and the model decides which plants satisfy the load based on available and expected generating capacity and minimum total cost. The model is somewhat unique in that it includes, jointly, the hydrologic operation of the reservoir, along with power production from all generating resources. It should be noted, however, that while it is possible to adjust basin runoff into the various hydropower reservoirs in the system, the OPTIM model cannot simulate the climatic and hydrologic processes that govern runoff itself. The long-run model available to national experts is the MARKAL model, which was used in the previous chapter covering the economic impacts of climate change due to changes in the climate-driven demand for space heating and cooling. MARKAL is a multi-year model that runs on a monthly time step. It can be used to determine the retirement of existing plants, the distribution infrastructure and the long-run cost-minimizing mix of generation and distribution resources that will replace the older units to meet future electricity demands. MARKAL also simulates monthly power production by each of the generating units that are available. While it does contain a hydro-electric generating sub-sector, the available maximum capacity of the hydro plants in each month of the planning period must be based on information obtained from OPTIM.
Evaluating the Capacity to Estimate the Economic Losses due to Climate Change in the Hydro-electric Generation Sector The capacity of experts and institutions to estimate the economic losses due to climate change in the energy sector, with a special focus on providing additional water for power generation to adapt to climate change, can be broken down into the following parts:
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Capacity to simulate the effects of climate change on runoff;
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Capacity to simulate the joint hydrologic operation of the reservoir and power production by a hydro-electric power plant (HPP);
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Capacity to optimally “balance” energy supply and demand across the entire generating system; and
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Capacity to estimate the value of the climate change damages due to changes in runoff and the benefits and costs of adaptation measures to avoid some of these damages.