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The Economics of Wind Power with Energy Storage

Pablo Benitez, Lilianna Dragulescu and Gerrit van Kooten

No 2006-02, Working Papers from University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group

Abstract: We develop a nonlinear mathematical optimization program for investigating the economic and environmental implications of wind penetration in electrical grids and evaluating how hydropower storage could be used to offset wind power intermittence. When wind power is added to an electrical grid consisting of thermal and hydropower plants, it increases system variability and results in a need for additional peak-load, gas-fired generators. Our empirical application using load data for Alberta’s electrical grid shows that 32% wind penetration (normalized to peak demand) results in a net cost increase of $C5.20/ MWh, while 64% wind penetration could result in an increase of $12.50/MWh. Costs of reducing CO2 emissions are estimated to be $41-$56 per t CO2 . When pumped hydro storage is introduced in the system or the capacity of the water reservoirs is enhanced, the hydropower facility could provide most of the peak load requirements obviating the need to build large peak-load gas generators.

Keywords: Renewable energy; carbon costs; hydropower storage; mathematical programming (search for similar items in EconPapers)
JEL-codes: Q40 Q42 Q50 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2006-06
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https://web.uvic.ca/~repa/publications/REPA%20work ... kingPaper2006-02.pdf Final version, 2006 (application/pdf)

Related works:
Journal Article: The economics of wind power with energy storage (2008) Downloads
Working Paper: The Economics of Wind Power with Energy Storage (2006) Downloads
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