The Value of Renewables?
What’s the value of wind and solar generation?
The answer: It depends on many factors—in particular, installed renewable capacity, variability of output over time and across regions, operational flexibility of fossil and nuclear power plants, regional electricity trade, and energy storage. This conclusion comes from a novel modeling framework developed by EPRI, which was applied to evaluate solar and wind deployment scenarios in California and Texas. The framework can be used to examine other renewable technologies and states.
Researchers analyzed long-term electric sector capacity planning along with various aspects of power market operations, providing a detailed look at the technical and economic impacts of renewable energy integration. A key observation: As renewable energy deployment increases, dispatchable generation may drop dramatically, even when capacity needs stay roughly the same. As a result, it may eventually be necessary to build two different power systems: one renewable system and another dispatchable system to provide backup when renewables cannot meet demand.
- The value of renewable energy decreases with increasing deployment across various technologies and geographic regions.
- Restrictions on transmission and regional coordination among grid operators increase renewable integration costs, pointing to the importance of effective market design and trade.
- Grid-connected energy storage is valuable for balancing supply and demand at high renewable penetration, but revenues diminish with increasing storage deployment.