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The economics of wind power with energy storage

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  • Benitez, Liliana E.
  • Benitez, Pablo C.
  • van Kooten, G. Cornelis

Abstract

We develop a nonlinear mathematical optimization program for investigating the economic and environmental implications of wind penetration in electrical grids and evaluating how hydropower storage could be used to offset wind power intermittence. When wind power is added to an electrical grid consisting of thermal and hydropower plants, it increases system variability and results in a need for additional peak-load, gas-fired generators. Our empirical application using load data for Alberta's electrical grid shows that costs of wind-generated electricity vary from $37 per MWh to $68/MWh, and depend primarily on the wind profiles of installed turbines. Costs of reducing CO2 emissions are estimated to be $41-$56 per t CO2. When pumped hydro storage is introduced in the system or the capacity of the water reservoirs is enhanced, the hydropower facility could provide most of the peak load requirements obviating the need to build large peak-load gas generators.

Suggested Citation

  • Benitez, Liliana E. & Benitez, Pablo C. & van Kooten, G. Cornelis, 2008. "The economics of wind power with energy storage," Energy Economics, Elsevier, vol. 30(4), pages 1973-1989, July.
  • Handle: RePEc:eee:eneeco:v:30:y:2008:i:4:p:1973-1989
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    References listed on IDEAS

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    1. Belanger, Camille & Gagnon, Luc, 2002. "Adding wind energy to hydropower," Energy Policy, Elsevier, vol. 30(14), pages 1279-1284, November.
    2. Ferdinand E. Banks, 2003. "An introduction to the economics of natural gas," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 27(1), pages 25-63, March.
    3. Lund, Henrik, 2005. "Large-scale integration of wind power into different energy systems," Energy, Elsevier, vol. 30(13), pages 2402-2412.
    4. Kim, T.S., 2004. "Comparative analysis on the part load performance of combined cycle plants considering design performance and power control strategy," Energy, Elsevier, vol. 29(1), pages 71-85.
    5. Lawrence Pitt & G. Cornelis van Kooten & Murray Love & Ned Djilali, 2005. "Utility-scale Wind Power: Impacts of Increased Penetration," Working Papers 2005-01, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    6. DeCarolis, Joseph F. & Keith, David W., 2006. "The economics of large-scale wind power in a carbon constrained world," Energy Policy, Elsevier, vol. 34(4), pages 395-410, March.
    7. Weisser, Daniel & Garcia, Raquel S., 2005. "Instantaneous wind energy penetration in isolated electricity grids: concepts and review," Renewable Energy, Elsevier, vol. 30(8), pages 1299-1308.
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    More about this item

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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