Optimal over installation of wind generation facilities

Celine McInerney and Derek W. Bunn

Energy Economics, 2017, vol. 61, issue C, 87-96

Abstract: This paper evaluates the economic benefits to over-installing turbines on capacity-constrained wind farm sites in order to capture more energy at low wind speeds. Although this implies curtailment at high wind speeds, we show that over installing generation facilities can increase returns to investors and reduce system costs. A detailed model-based analysis is developed using British data, with variations in the range of over installation, the renewable policy support systems (fixed feed-in tariffs or green certificate premia to wholesale energy prices) and the extent of replacement of fossil generation in the technology mix with wind. In the cases of premia to market prices, we use agent-based, computational learning and risk simulation to model market prices. Not only is over installation beneficial under fixed feed-in tariffs, but is more so under premia to market prices and increasingly so as wind replaces fossil generation.

Keywords: Capacity investment; Wind power generation; Electricity markets; Power system economics; Risk; Agent-based simulation; Investment appraisal (search for similar items in EconPapers)
JEL-codes: E22 P18 Q22 Q42 Q47 Q48 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:61:y:2017:i:c:p:87-96

DOI: 10.1016/j.eneco.2016.10.022

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