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Assessing the economic value of renewable distributed generation in the Northeastern American market

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  • Amor, Mourad Ben
  • Pineau, Pierre-Olivier
  • Gaudreault, Caroline
  • Samson, Réjean

Abstract

Incentive programs and tax rebates are commonly offered to offset the high initial costs of small-scale renewable energy systems (RES) and foster their implementation. However, the economic costs of RES grid integration must be fully known in order to determine whether such subsidies are justified. The objective of this paper is to assess the economic value of RES, including their environmental benefits, using hourly generation information in conjunction with hourly wholesale price data. Reaching the paper′s objective will provide a better estimate of the bias that could result from neglecting 1) the time pattern of the hourly wholesale price, 2) the impacts of carbon taxes on the hourly wholesale price and 3) the value of the marginal hourly GHG emissions. Selected RES include two types of grid-connected photovoltaic panels (3kWp mono- and poly-crystalline) and three types of micro-wind turbines (1, 10 and 30kW) modeled for different climatic conditions in the province of Quebec (Canada). The cost of electricity is based on the technical performance of these RES using a life cycle costing methodology. The economic value of RES electricity is estimated using the hourly wholesale electricity price in Northeastern American markets in 2006–2008. Results show that distributed generation (DG) has no economic benefits using the selected RES, even with a US$100/tonne of CO2-equivalent carbon tax. This finding remains the same when the value of the avoided GHG emissions is fully internalized, except for one scenario (micro-wind 30kW). Our results are key to understanding the extent to which subsidies for distributed RES can be economically sustainable when the latter are integrated into regional networks driven by centralized electricity production.

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  • Amor, Mourad Ben & Pineau, Pierre-Olivier & Gaudreault, Caroline & Samson, Réjean, 2012. "Assessing the economic value of renewable distributed generation in the Northeastern American market," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(8), pages 5687-5695.
    • Handle: RePEc:eee:rensus:v:16:y:2012:i:8:p:5687-5695
    DOI: 10.1016/j.rser.2012.06.027
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    1. Azofra, D. & Martínez, E. & Jiménez, E. & Blanco, J. & Saenz-Díez, J.C., 2014. "Comparison of the influence of biomass, solar–thermal and small hydraulic power on the Spanish electricity prices by means of artificial intelligence techniques," Applied Energy, Elsevier, vol. 121(C), pages 28-37.
    2. Descateaux, Paul & Astudillo, Miguel F. & Amor, Mourad Ben, 2016. "Assessing the life cycle environmental benefits of renewable distributed generation in a context of carbon taxes: The case of the Northeastern American market," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 1178-1189.
    3. Oliva H., Sebastian & Muñoz, Juan & Fredes, Felipe & Sauma, Enzo, 2022. "Impact of increasing transmission capacity for a massive integration of renewable energy on the energy and environmental value of distributed generation," Renewable Energy, Elsevier, vol. 183(C), pages 524-534.
    4. Xueliang Yuan & Leping Chen & Xuerou Sheng & Mengyue Liu & Yue Xu & Yuzhou Tang & Qingsong Wang & Qiao Ma & Jian Zuo, 2021. "Life Cycle Cost of Electricity Production: A Comparative Study of Coal-Fired, Biomass, and Wind Power in China," Energies, MDPI, vol. 14(12), pages 1-15, June.
    5. Azofra, D. & Martínez, E. & Jiménez, E. & Blanco, J. & Azofra, F. & Saenz-Díez, J.C., 2015. "Comparison of the influence of photovoltaic and wind power on the Spanish electricity prices by means of artificial intelligence techinques," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 532-542.
    6. Ramli, Makbul A.M. & Twaha, Ssennoga & Al-Hamouz, Zakariya, 2017. "Analyzing the potential and progress of distributed generation applications in Saudi Arabia: The case of solar and wind resources," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 287-297.
    7. Anaya, Karim L. & Pollitt, Michael G., 2017. "Going smarter in the connection of distributed generation," Energy Policy, Elsevier, vol. 105(C), pages 608-617.

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