| Hydropower producers face a future beset by unprecedented changes in the electric power industry, including the rapid growth of installed wind power capacity and a vastly increased supply of natural gas due to horizontal hydraulic fracturing (or "fracking"). There is also increased concern surrounding the potential for climate change to impact the magnitude and frequency of droughts. These developments may significantly alter the financial landscape for hydropower producers and have important ramifications for the environmental impacts of dams.;Incorporating wind energy into electric power systems has the potential to affect price dynamics in electricity markets and, in so doing, alter the short-term financial signals on which dam operators rely to schedule reservoir releases. Chapter 1 of this doctoral dissertation develops an integrated reservoir-power system model for assessing the impact of large scale wind power integration of hydropower resources. Chapter 2 explores how efforts to reduce the carbon footprint of electric power systems by using wind energy to displace fossil fuel-based generation may inadvertently yield further impacts to river ecosystems by disrupting downstream flow patterns.;Increased concern about the potential for climate change to alter the frequency and magnitude of droughts has led to growing interest in "index insurance" that compensates hydropower producers when values of an environmental variable (or index), such as reservoir inflows, crosses an agreed upon threshold (e.g., low flow conditions). Chapter 3 demonstrates the need for such index insurance contracts to also account for changes in natural gas prices in order to be cost-effective.;Chapter 4 of this dissertation analyzes how recent low natural gas prices (partly attributable to fracking) have reduced the cost of implementing ramp rate restrictions at dams, which help restore sub-daily variability in river flows by limiting the flexibility of dam operators in scheduling reservoir releases concurrent with peak electricity demand. |
