The cost of wind power variability

• Published in: Energy policy 2012-12, Vol.51, p.233-243
• Main Authors: Katzenstein, Warren, Apt, Jay
• Format: Article
• Language: English
• Subjects: Applied sciences; Benefits; Cost; Cost estimates; Costs; Economic data; Electric energy; Energy; Energy economics; Energy policy; Energy resources; Exact sciences and technology; General, economic and professional studies; Interconnecting wind plants; Location; Market prices; Markets; Natural energy; Power plants; Prices; Studies; Uncertainty; Valuation; Wind energy; Wind power; Wind power variability; Wind power variability cost
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2012.07.032

We develop a metric to quantify the sub-hourly variability cost of individual wind plants and show its use in valuing reductions in wind power variability. Our method partitions wind energy into hourly and sub-hourly components and uses corresponding market prices to determine variability costs. We use publically available 15-min ERCOT data, although the method developed can be applied to higher time resolution data if available. We do not estimate uncertainty costs though our metric can separate integration costs into variability and uncertainty components. The mean variability costs arising from 15-min to 1-h variations (termed load following) for 20 ERCOT wind plants was $8.73±$1.26 per MWh in 2008 and $3.90±$0.52 per MWh in 2009. Load following variability costs decrease as capacity factors increase, indicating wind plants sited in locations with good wind resources cost a system less to integrate. Twenty interconnected wind plants had a variability cost of $4.35 per MWh in 2008. The marginal benefit of interconnecting another wind plant diminishes rapidly: it is less than $3.43 per MWh for systems with 2 wind plants already interconnected, less than $0.7 per MWh for 4–7 wind plants, and less than $0.2 per MWh for 8 or more wind plants. [Display omitted] ► A new metric for evaluating the cost of wind power variability is presented. ► In ERCOT, wind plants with higher capacity factors cost a system less to integrate. ► The marginal benefit of interconnecting wind plants in ERCOT decreases rapidly. ► Integration cost depends more on power produced than on ancillary service prices.