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Wind Power: The Economic Impact of Intermittency

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  • G. Cornelis van Kooten

Abstract

Wind is the fastest growing renewable energy source for generating electricity, but economic research lags behind. In this study, therefore, we examine the economics of integrating large-scale wind energy into an existing electrical grid. Using a simple grid management model to investigate the impact of various levels of wind penetration on grid management costs, we show that costs of reducing CO2 emissions by relying more on wind power depend on the generation mix of the existing electricity grid and the degree of wind penetration, with costs ranging from $21 to well over $1000 per tonne of CO2 reduced. Costs are lowest if wind displaces large amounts of fossil fuel production and there is some hydroelectric power to act as a buffer. Hydro capacity has the ability to store wind generated power for use at more opportune times. If wind does nothing more than replace hydro or nuclear power then the environmental benefits (reduced CO2 emissions) of investing in wind power are small.

Suggested Citation

  • G. Cornelis van Kooten, 2009. "Wind Power: The Economic Impact of Intermittency," Working Papers 2009-04, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
  • Handle: RePEc:rep:wpaper:2009-04
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    File URL: https://web.uvic.ca/~repa/publications/REPA%20working%20papers/WorkingPaper2009-04.pdf
    File Function: Final version, 2009
    Download Restriction: no

    Citations

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    Cited by:

    1. Timilsina, Govinda R. & Cornelis van Kooten, G. & Narbel, Patrick A., 2013. "Global wind power development: Economics and policies," Energy Policy, Elsevier, vol. 61(C), pages 642-652.
    2. Scorah, Hugh & Sopinka, Amy & van Kooten, G. Cornelis, 2012. "The economics of storage, transmission and drought: integrating variable wind power into spatially separated electricity grids," Energy Economics, Elsevier, vol. 34(2), pages 536-541.
    3. Kern, Jordan D. & Patino-Echeverri, Dalia & Characklis, Gregory W., 2014. "An integrated reservoir-power system model for evaluating the impacts of wind integration on hydropower resources," Renewable Energy, Elsevier, vol. 71(C), pages 553-562.
    4. G. Cornelis van Kooten, 2013. "Economic analysis of feed-in tariffs for generating electricity from renewable energy sources," Chapters,in: Handbook on Energy and Climate Change, chapter 9, pages 224-253 Edward Elgar Publishing.
    5. T. Heikkinen, 2014. "A Hotelling model of spatial competition with local production," Letters in Spatial and Resource Sciences, Springer, vol. 7(2), pages 103-120, July.
    6. Narbel, Patrick A., 2014. "Rethinking how to support intermittent renewables," Discussion Papers 2014/17, Norwegian School of Economics, Department of Business and Management Science.

    More about this item

    Keywords

    Wind power; carbon costs; electricity grids; mathematical programming;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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