Estimating the Cost of Solar Generation Uncertainty and the Impact of Collocated Energy Storage: The Case of Korea

Wooyoung Jeon and Chul-Yong Lee
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Wooyoung Jeon: Department of Economics, Chonnam National University, 77, Yongbong-ro, Buk-gu, Kwangju 61186, Korea
Chul-Yong Lee: School of Business, Pusan National University, 2 Busandaehak-ro 63beon-gil, Geumjeong-gu, Busan 46241, Korea

Sustainability, 2019, vol. 11, issue 5, 1-18

Abstract: As a major option for reducing greenhouse gas emission and sustainable development, renewable generation is rapidly expanding in the power sector. However, the variability and uncertainty of renewable generation undermine the reliability of the power system, requiring additional reserve capacities. This study estimates the costs induced by additional reserve capacities to reduce the uncertainty of solar generation in the Korean power system and analyzes the effectiveness of the Energy Storage System (ESS) in reducing these costs, using the stochastic form of multi-period security-constraint optimal power flow. To determine the input of stochastic solar generation, an ARMAX model and Monte Carlo method are applied for representative solar farms. The results indicate solar power generation by 2029 would increase the required reserve by 56.2% over the current level but coupling a 10 GWh of lithium-ion ESS would reduce it by 61.1% compared to increased reserve level for 2029. The operating cost reduction (benefit) by ESS would be 80.8% higher in 2029 compared to the current level and cover 89.9% of its installation cost. The benefit of ESS will be improved when (1) offer prices of reserves correctly reflect the true opportunity cost of providing reserve services and (2) more variable renewable energies are deployed.

Keywords: renewable energy; solar generation; uncertainty; energy storage; operating cost (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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