Cost–Benefit Analysis for Flexibility in Hydrothermal Power Systems

Gabriel de Azevedo Cavados and Amaro Olimpio Pereira ()
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Gabriel de Azevedo Cavados: Energy Planning Program, Alberto Luiz Coimbra Institute for Graduate Studies and Engineering Research, Federal University of Rio de Janeiro (PPE/COPPE-UFRJ), Rio de Janeiro 21941-914, Brazil
Amaro Olimpio Pereira: Energy Planning Program, Alberto Luiz Coimbra Institute for Graduate Studies and Engineering Research, Federal University of Rio de Janeiro (PPE/COPPE-UFRJ), Rio de Janeiro 21941-914, Brazil

Energies, 2024, vol. 17, issue 19, 1-18

Abstract: The world is experiencing an energy transition, migrating from fossil fuels to renewables, which are usually intermittent and, therefore, require flexibility to keep the power system reliable. Although system flexibility is a well-known theme of research, the question “What is a fair cost for flexibility?” remains to be answered. The present paper proposes a metric to estimate the value of a flexible resource to a power system. This metric is especially important in hydroelectric systems, where the flexibility of the hydro portfolio is uncertain and subject to seasonal changes and other considerations such as agricultural use. The valuation of a flexible resource by its cost–benefit is necessary since its installation generates operational savings to the entire system. A combined project cost and system overall savings is proposed to assess the net cost of a flexible resource. The net cost of flexibility can be used as a metric to rank flexibility candidates in systems with large amounts of renewable energy. A simplified case study of the Brazilian energy system is presented, and the flexibility solutions are evaluated according to the new metric. Results show how different technologies impact the system overall costs and the importance of analyzing system needs (both short and medium terms) when planning the expansion of flexibility in hydro systems.

Keywords: flexibility; net cost of flexibility; hydroelectric systems; levelized cost of electricity; renewables; variable renewable energy (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
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