Implications of water constraints for electricity capacity expansion in the United States

U.S. electricity generation is vulnerable to water supply since water is required for cooling. Constraints on the availability of water will therefore necessitate adaptive planning by the power generation sector. Hence, it is important to integrate restrictions in water availability in electricity capacity planning in order to better understand the economic viability of alternative capacity planning options. The study of the implications of water constraints for the U.S. power generation system is limited in terms of scale and robustness. We extend previous studies by including physical water constraints in a state-level model of the U.S. energy system embedded within a global integrated assessment model (GCAM-USA). We focus on the implications of such constraints for the U.S. electricity capacity expansion, integrating both supply and demand effects under a consistent framework. Constraints on the availability of water have two general effects across the U.S. First, water availability constraints increase the cost of electricity generation, resulting in reduced electrification of end-use sectors. Second, water availability constraints result in forced retirements of water-intensive technologies such as thermoelectric coal- and gas- fired technologies before the end of their natural lifetimes. The demand for electricity is then met by an increase in investments in less water-dependent technologies such as wind and solar photovoltaic. Our results show that the regional patterns of the above effects are heterogeneous across the U.S. In general, the impacts of water constraints on electricity capacity expansion are more pronounced in the West than in the East. This is largely because of lower water availability in the West compared to the East due to lower precipitation in the Western states. Constraints on the availability of water might also have important implications for U.S. electricity trade. For example, under severe constraints on the availability of water, some states flip from being net exporters of electricity to becoming net importers and vice versa. Our study demonstrates the impacts of water availability constraints on electricity capacity expansion in the U.S. and highlights the need to integrate such constraints into decision-making so as to better understand state-level challenges.