Optimal Integration of Intermittent Renewables: A System LCOE Stochastic Approach

Abstract

Abstract:We propose a system level approach to value the impact on costs of the integration of intermittent renewable generation in a power system, based on expected breakeven cost and breakeven cost risk. To do this, we carefully reconsider the definition of Levelized Cost of Electricity (LCOE) when extended to non-dispatchable generation, by examining extra costs and gains originated by the costly management of random power injections. We are thus lead to define a 'system LCOE' as a system dependent LCOE that takes properly into account intermittent generation. In order to include breakeven cost risk we further extend this deterministic approach to a stochastic setting, by introducing a 'stochastic system LCOE'. This extension allows us to discuss the optimal integration of intermittent renewables from a broad, system level point of view. This paper thus aims to provide power producers and policy makers with a new methodological scheme, still based on the LCOE but which updates this valuation technique to current energy system configurations characterized by a large share of non-dispatchable production. Quantifying and optimizing the impact of intermittent renewables integration on power system costs, risk and CO 2 emissions, the proposed methodology can be used as powerful tool of analysis for assessing environmental and energy policies.

CO2 Price Volatility Effects on Optimal Power System Portfolios

“…In both volatility scenarios, with the exception of the lowest CO 2 price level case µ ca = 10, systemic efficient frontiers are straight lines. In the presence of a risk-free dispatchable asset with unlimited availability, this is a general result due to the mathematical properties of the so-called risk 'deviation measures' [20,34] (in our analysis, the standard deviation and the CVaR deviation). In such cases, efficient systemic portfolios are composed by mixtures of gas, nuclear power and wind.…”

“…in the power system is performed by hedging the intermittent power generation in the following way. When non-dispatchable electricity is generated and injected into the grid, energy generation from dispatchable sources must be reduced by the same quantity in order to match the energy demand, i.e., to leave Q sys invariant [34]. We point out that the inclusion of a given non-dispatchable power capacity in a system portfolio does not replace the power capacity of the dispatchable component of the same amount (for example, wind may not blow during peak hours).…”

Real Levelized Cost of Energy with Indirect Costs and Market Value of Variable Renewables: A Study of the Korean Power Market

“…There have been extensive studies on the use of LCOE in the electricity market. The effect of the variability of RE on system integration cost was analyzed in Reference [8]. Here, the author emphasized that the LCOE cannot demonstrate the economics of RE.…”

“…The LCOE is commonly applied to compare different power generation. The LCOE is expressed in terms of the unit cost ($/kWh) of electricity generation when the present value of expected profits from electricity sales is equivalent to the present value of all expected costs during the lifecycle [8]. The LCOE has several improvements as a cost metric, such as its ability to standardize costs into an easily comprehensible format across technology types [21].…”

Energy Diagnosis of University Buildings: Renewable Energy Institute from UNAM

“…Currently, renewable energy sources have become very popular due to their advantages in fossil fuel savings and the low or zero emissions of pollutants to the environment during power generation, but these sources still do not meet the energy needs, although they have been decisive in the solution of many energy problems, like in the case of rural electrification and water supply [1][2][3]. Thus, the so-called conventional energy sources, based on hydrocarbons or combustible fuels, it remains that the main energy source for both the residential and the productive sector [4].…”