Capacity Investment in Renewable and Conventional Energy Sources

This dissertation studies capacity investments in energy sources, with a focus on renewable technologies, such as solar and wind energy. We develop analytical models to provide insights for policymakers and use real data from the state of Texas to corroborate our findings.

We first take a strategic perspective and focus on electricity pricing policies. Specifically, we investigate the capacity investments of a utility firm in renewable and conventional energy sources under flat and peak pricing policies. We consider generation patterns and intermittency of solar and wind energy in relation to the electricity demand throughout a day. We find that flat pricing leads to a higher investment level for solar energy and it can still lead to more investments in wind energy if considerable amount of wind energy is generated throughout the day.

In the second essay, we complement the first one by focusing on the problem of matching supply with demand in every operating period (e.g., every five minutes) from the perspective of a utility firm. We study the interaction between renewable and conventional sources with different levels of operational flexibility, i.e., the possibility

of quickly ramping energy output up or down. We show that operational flexibility determines these interactions: renewable and inflexible sources (e.g., nuclear energy) are substitutes, whereas renewable and flexible sources (e.g., natural gas) are complements.

In the final essay, rather than the capacity investments of the utility firms, we focus on the capacity investments of households in rooftop solar panels. We investigate whether or not these investments may cause a utility death spiral effect, which is a vicious circle of increased solar adoption and higher electricity prices. We observe that the current rate-of-return regulation may lead to a death spiral for utility firms. We show that one way to reverse the spiral effect is to allow the utility firms to maximize their profits by determining electricity prices.

From the Cover: Arsenite Uncouples Mitochondrial Respiration and Induces a Warburg-like Effect in Caenorhabditis elegans.

Millions of people worldwide are chronically exposed to arsenic through contaminated drinking water. Despite decades of research studying the carcinogenic potential of arsenic, the mechanisms by which arsenic causes cancer and other diseases remain poorly understood. Mitochondria appear to be an important target of arsenic toxicity. The trivalent arsenical, arsenite, can induce mitochondrial reactive oxygen species production, inhibit enzymes involved in energy metabolism, and induce aerobic glycolysis in vitro, suggesting that metabolic dysfunction may be important in arsenic-induced disease. Here, using the model organism Caenorhabditis elegans and a novel metabolic inhibition assay, we report an in vivo induction of aerobic glycolysis following arsenite exposure. Furthermore, arsenite exposure induced severe mitochondrial dysfunction, including altered pyruvate metabolism; reduced steady-state ATP levels, ATP-linked respiration and spare respiratory capacity; and increased proton leak. We also found evidence that induction of autophagy is an important protective response to arsenite exposure. Because these results demonstrate that mitochondria are an important in vivo target of arsenite toxicity, we hypothesized that deficiencies in mitochondrial electron transport chain genes, which cause mitochondrial disease in humans, would sensitize nematodes to arsenite. In agreement with this, nematodes deficient in electron transport chain complexes I, II, and III, but not ATP synthase, were sensitive to arsenite exposure, thus identifying a novel class of gene-environment interactions that warrant further investigation in the human populace.