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Wind Power: The Economic Impact of Intermittency

Gerrit van Kooten

No 54370, Working Papers from University of Victoria, Resource Economics and Policy

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.

Keywords: Environmental Economics and Policy; Resource /Energy Economics and Policy (search for similar items in EconPapers)
Pages: 26
Date: 2009-06
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uvicwp:54370

DOI: 10.22004/ag.econ.54370

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