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Assessing the long-term system value of intermittent electric generation technologies

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  • Lamont, Alan D.

Abstract

This research investigates the economic penetration and system-wide effects of large-scale intermittent technologies in an electric generation system. The research extends the standard screening curve analysis to optimize the penetration and system structure with intermittent technologies. The analysis is based on hour-by-hour electric demands and intermittent generation. A theoretical framework is developed to find an expression for the marginal value of an intermittent technology as a function of the average system marginal cost, the capacity factor of the generator, and the covariance between the generator's hourly production and the hourly system marginal cost. A series of model runs are made examining the penetration of wind and photovoltaic in a simple electric generation system. These illustrate the conclusions in the theoretical analysis and illustrate the effects that large-scale intermittent penetration has on the structure of the generation system. In the long-term, adding intermittent generation to a system allows us to restructure the dispatchable generation capacity to a mix with lower capital cost. It is found that large-scale intermittent generation tends to reduce the optimal capacity and production of baseload generators and increase the capacity and production of intermediate generators, although the extent to which this occurs depends strongly on the pattern of production from the intermediate generators. It is also shown that the marginal value of intermittent generation declines as it penetrates. The analysis investigates the specific mechanism through which this occurs.

Suggested Citation

  • Lamont, Alan D., 2008. "Assessing the long-term system value of intermittent electric generation technologies," Energy Economics, Elsevier, vol. 30(3), pages 1208-1231, May.
  • Handle: RePEc:eee:eneeco:v:30:y:2008:i:3:p:1208-1231
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    1. Grubb, Michael J., 1988. "The potential for wind energy in Britain," Energy Policy, Elsevier, vol. 16(6), pages 594-607, December.
    2. Hirst, Eric & Hild, Jeffrey, 2004. "The Value of Wind Energy as a Function of Wind Capacity," The Electricity Journal, Elsevier, vol. 17(6), pages 11-20, July.
    3. DeCarolis, Joseph F. & Keith, David W., 2005. "The Costs of Wind's Variability: Is There a Threshold?," The Electricity Journal, Elsevier, vol. 18(1), pages 69-77.
    4. Grubb, M. J., 1991. "The integration of renewable electricity sources," Energy Policy, Elsevier, vol. 19(7), pages 670-688, September.
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