Optimal Allocation of Variable Renewable Energy Considering Contributions to Security of Supply

Jakob Peter and Johannes Wagner

No 2018-2, EWI Working Papers from Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)

Abstract: Electricity markets are increasingly influenced by variable renewable energy such as wind and solar power with a pronounced weather-induced variability and imperfect predictability. As a result, the evaluation of the capacity value of variable renewable energy, i.e. its contribution to security of supply, gains importance. This paper develops a new methodology to endogenously determine the capacity value in large-scale investment and dispatch models for electricity markets. The framework allows to account for balancing effects due to the spatial distribution of generation capacities and interconnectors. The practical applicability of the methodology is shown with an application for wind power in Europe. We find that wind power can substantially contribute to security of supply in a decarbonized European electricity system in 2050, with regional capacity values ranging from 1 - 40%. Analyses, which do not account for the temporal and spatial heterogeneity of the contribution of wind power to security of supply therefore lead to inefficient levels of dispatchable back-up capacity. Applying a fixed wind power capacity value of 5% results in an overestimation of firm capacity requirements in Europe by 66GW in 2050. This translates to additional firm capacity provision costs of 3.8 bn EUR per year in 2050, which represents an increase of 7%.

Keywords: Reliability of supply; Capacity adequacy; Multi-regional power system; Wind power; Power system modeling (search for similar items in EconPapers)
JEL-codes: C61 C63 D47 L50 Q42 Q48 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2018-08-06
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:ewikln:2018_002

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