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Essays on the efficiency of electricity generation in Nebraska

Diego R Alvarez, University of Nebraska - Lincoln


Fossil fuel power plants are responsible for roughly 40 percent of US CO2 emissions. While an important component of the U.S. strategy to reduce CO2 emissions in the long run involves a shift away from coal-fired generation, an effective strategy for the short and medium run entails the production of energy in the most environmentally efficient possible way. Chapter 1 evaluates the environmental efficiency of 14 Nebraska fossil-fuel electricity plants and determines whether they can reduce their CO2 emissions without decreasing their power output. Results show that the least environmentally efficient plants are natural gas-fired, peaking units and that the source of the measured inefficiency is increasing (as opposed to decreasing) returns to scale. Results also show by how much these plants can reduce their CO2 emissions without decreasing their power output, and in what way. Chapter 2 measures the environmental and the cost efficiency of the 8 largest Nebraska fossil fueled electricity plants and identifies the shadow cost of CO2 emissions abatement for these plants. The largest, base-load, coal-fired plants are the most cost efficient ones. Natural gas-fired, peaking units, have substantially lower cost efficiency scores. Some of the most environmentally efficient plants are natural gas-fired plants, as expected. However, some coal fire plants are found to be environmentally efficient as well. The average shadow price of each ton of CO2 emissions is $108. Results also show how inefficient plants can increase their cost and environmental efficiencies. Chapter 3 introduces a centralized cost and emissions minimization DEA model and applies it to the study of electricity generation by the Nebraska Public Power District (NPPD) and the Omaha Public Power District (NPPD), the two largest utilities in the state. It illustrates how the separate projection on the efficient frontier performed by traditional DEA models does not guarantee an overall minimization of cost or emissions and thus, a centralized DEA cost or emissions minimization model such as the one presented here is more appropriate.

Subject Area

Environmental economics|Management|Energy

Recommended Citation

Alvarez, Diego R, "Essays on the efficiency of electricity generation in Nebraska" (2013). ETD collection for University of Nebraska - Lincoln. AAI3590964.