Marginal contribution of renewable energy sources to the reduction of emissions and security of supply

Abstract

Increasing concerns in global warming, pollution and security of supply over the last decades point out the importance of renewable energy sources. They do not emit greenhouse gases or any toxic pollutants, diversify energy supply, improve fuel independency and supply adequacy, reduce system operating costs, and stimulate economic growth. Unfortunately, renewable sources are not competitive enough in current markets, where these externalities are not fully internalized in the price of energy. In this thesis, a methodology is proposed to evaluate marginal impacts of RES capacity increase on emissions, operating costs and adequacy. The methodology is implemented to the Iberian electricity market and it is applicable in European markets. The impacts are monetized separately for each pollutant, cost component and RES technology (wind and solar photovoltaic power systems) for the year 2015. First, marginal units are identified in every hour and then associated emission displacement and operating costs savings are computed. For adequacy savings, a heuristic approach developed. Results show the comparative advantage of wind over solar photovoltaic power systems as well as cost savings by 1 MW of RES capacity increase. The study also compares the findings against estimated technology costs. This proposed methodology provides a transparent tool that might be used for analyzing RES support schemes and for future policy design.