The total cost renewable energy : integrating variable generation in today's electric power system

Abstract

Driven by environmental concerns and a desire to secure energy supplies, significant quantities of variable generation from wind, solar and wave power are installed in today’s power systems. However, the intermittent, uncertain and location specific nature of these variable renewable energy sources (VREs) imposes integration costs on power systems that have been designed for “onBandBoffable” conventional generators. Thisreportestimatestotalcosts(generationcosts+integrationcosts)foronshorewindin four diverse European countries with high wind penetration: Germany, Spain, Ireland andDenmark.Firstly,abroadliteraturereviewanddiscussionoffundamentalconcepts and VRE market effects is presented. Then, explanation of the market based cost methodologyusingmarketandtransmissionsystemoperatordatafrom2012and2013 is given. Finally, results across the four countries find total costs to range from 72– 86€/MWh with integration costs from 10–16€/MWh, a 16–24% premium on commonly estimated levelised generation costs. This dissertation concludes that system characteristics have a greater impact than penetration levels alone and that decision makers should stop using incomplete levelised generation cost estimates and accountfortotalVREcostsinplanningfutureelectricpowersystems.