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The Economics of Wind Power with Energy Storage

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  • Benitez, Pablo C.
  • Dragulescu, Lilianna
  • 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 32% wind penetration (normalized to peak demand) results in a net cost increase of $C5.20/ MWh, while 64% wind penetration could result in an increase of $12.50/MWh. 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, Pablo C. & Dragulescu, Lilianna & van Kooten, G. Cornelis, 2006. "The Economics of Wind Power with Energy Storage," Working Papers 37029, University of Victoria, Resource Economics and Policy.
    • Handle: RePEc:ags:uvicwp:37029
    DOI: 10.22004/ag.econ.37029
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    References listed on IDEAS

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    More about this item

    Keywords

    Environmental Economics and Policy; Resource /Energy Economics and Policy;

    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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