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Study: Global warming could mean a surge in electricity prices

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ANN ARBOR, Mich. – U.S electricity costs could rise billions of dollars over the next century due to climate change, according to a study involving a University of Michigan researcher. 

According to the study titled "Climate change is projected to have severe impacts on the frequency and intensity of peak electricity demand in the United States," higher temperatures will increase the average annual electrical demand as well as the peak demand. This increase will mean utilities will need to spend between $70 billion and $180 billion to upgrade grids in order to avoid brownouts.

“The question we asked was, 'On the hottest day of the year, when people are maxing out on that, can the grid handle it?'” said Catherine Hausman, assistant professor at U-M's Gerald R. Ford School of Public Policy. “We build the grid for the hottest hour of the year."

New power plants and futuristic energy storage systems would end up being funded by ratepayers, according to researchers.

According to researchers, the need varies by region and 166 load-balancing authorities were examined separately.

To generate cost figures, the mathematical relationship between air temperature and electricity in each region was calculated. The numbers were then plugged that into simulations that took into account climate models and two different carbon emissions scenarios identified by the Intergovernmental Panel on Climate Change.

The first scenario, dubbed a “business as usual” approach, would represent rising carbon emissions. The second scenario would represent stabilized emissions.

According to the researchers’ calculations, under the business-as-usual approach demand on a peak usage day would increase 18 percent and the number of days in the 95th percentile or above would go up by 395 percent. The stabilization scenario would raise the average day demand 3 percent and raise the peak day demand 7 percent. There would be a 152 percent change in the number of days experiencing the 95th percentile or above of demand.

The stabilization scenario would cost $70 billion, while preparing for the business-as-usual scenario would cost $180 billion, according to the study. The money would be used to pay for electricity storage technologies.

The study is not a prediction, however.

"We're not trying to say this is the future scenario," Hausman said. "We're saying, 'If the future climate were here now, what would need to happen to the grid to adapt to that warmer world?’”

Considering current technology, if the projected climate of 2117 were to occur tomorrow, Hausman said more fossil fuel plants would need to be built to handle the highest demand days.

The study suggests wind and solar energy could help, but noted that without better energy storage options, sun and wind won’t be enough.

Hausman and colleagues urge electric grid planners to remember the study’s calculations when drafting 20-year procurement plans.

The study also involved researchers from the University of California, Berkeley; Stanford University and the University of British Columbia.

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