Analyzing major challenges of wind and solar variability in power systems

Highlights

• We analyze three major challenges of integrating wind and solar PV into power systems.

• These are a low capacity credit, reduced utilization of dispatchable plants and over-production.

• All integration challenges increase with penetration, irrespective of mix and region.

• At low penetrations, solar PV is much easier to integrate in US Indiana than in Germany.

• For wind, the challenges increase more modestly with penetration than for solar.

Abstract

Ambitious policy targets together with current and projected high growth rates indicate that future power systems will likely show substantially increased generation from renewable energy sources. A large share will come from the variable renewable energy (VRE) sources wind and solar photovoltaics (PV); however, integrating wind and solar causes challenges for existing power systems. In this paper we analyze three major integration challenges related to the structural matching of demand with the supply of wind and solar power: low capacity credit, reduced utilization of dispatchable plants, and over-produced generation. Based on residual load duration curves we define corresponding challenge variables and estimate their dependence on region (US Indiana and Germany), penetration and mix of wind and solar generation. Results show that the impacts of increasing wind and solar shares can become substantial, and increase with penetration, independently of mix and region. Solar PV at low penetrations is much easier to integrate in many areas of the US than in Germany; however, some impacts (e.g. over-production) increase significantly with higher shares. For wind power, the impacts increase rather moderately and are fairly similar in US Indiana and Germany.

Introduction

Future power systems will likely show a substantially increased share of renewable energy of which a large share will come from the variable renewable energy (VRE) sources wind and solar PV. This is indicated by the current high growth rates, future market trends, ambitious policy targets and support schemes, and scenario results.

The expansion of variable renewable electricity is progressing rapidly, with worldwide annual growth rates for wind and solar PV of 21% and 55%, respectively, from end-2008 to 2013 [1]. In 2012 new power generating capacity from renewables exceeded that of conventional fuels (fossil and nuclear) [2]. In 2013, Denmark, Germany and Spain had renewable electricity generation shares of 56%, 25% and 42%, respectively, with more than half being from wind and solar energy in each country [1]. For the future policy makers have set renewable energy targets (in 138 countries) and adopted support schemes (in 127 countries) for a variety of reasons including climate-change mitigation targets, enhanced energy security and to reduce externalities such as air pollution [2]. For example, Denmark has a goal of 100% renewables in final energy consumption and Germany is aiming for 80% in the power sector by 2050. The European Council adopted an EU-wide binding target of at least 27% renewables in final energy in 2030 [3] and in its ‘Energy Roadmap 2050’ the share of renewables rises substantially in all decarbonization scenarios, achieving at least 55% in final energy in 2050 [4]. In the US, many states have introduced renewable portfolio standards that require increased renewable electricity shares. For example, California and Colorado have targets of 33% and 30% by 2030, respectively.

Many long-term integrated assessment scenarios and bottom-up resource assessment studies show that renewable energy has the potential to play an important role in achieving ambitious climate mitigation targets [5], [6], [7], [8], [9], [10]. Scenario results summarized in Ref. [6] suggest that in the case of future policies to mitigate climate change in line with the globally-agreed long-term climate targets, renewable energy shares as a fraction of total primary energy consumption will increase from 13% to a range of 30%–80% by the middle of the century, with the uncertainty being mainly due to variations in assumptions as to which other low-carbon technologies will be available to complement renewables. The recent EMF27 model comparison [10] shows that for all but one model, renewables provide more than 35% of power supply in the second half of the century, and half of the models have a renewables share of 59% or higher. In those scenarios with high overall renewable deployment wind and solar PV contribute the major electricity share exceeding 40% in the second half of the century.

Achieving the high shares of wind and solar presented in many scenarios will require integration into global power systems. However, VRE differs from conventional power-generating technologies in that they exhibit characteristic properties that pose challenges to their integration. There is wide consensus that these challenges create no insurmountable technical barriers to high VRE shares, however, they cause additional costs at the system level, which are usually termed “integration costs” [6], [11], [12], [13], [14], [15]. There are slight differences in the way many studies classify the cost-driving VRE properties, but it is possible to categorize three specific properties of VRE: uncertainty, locational specificity, and variability [12], [14], [15], [16], [17], [18]. Integration studies often estimate the associated costs of these properties. We briefly go through the properties and elucidate their technical reason and relative importance.

First, VRE output is uncertain due to the limited predictability (forecast errors) of inherent natural variations of wind speeds or solar irradiation. This requires additional short-term balancing services and the provision of operating reserve capacity. Some studies review balancing costs estimates for wind and find that they are mostly below about 6 €/MWh of wind which is about 10% of their levelized costs of generation [12], [19], [20]. Note that with steadily improving forecast techniques these costs are likely to further decrease.

Second, VRE output is location-specific because the primary energy carrier of wind and solar power cannot be transported like fossil or nuclear fuels and consequently additional costs for electricity transmission occur to meet spatially distributed demand. Estimates for grid costs are scarce and there is no common methodology. It is estimated that annual transmission grid costs of € 1bn may be incurred to integrate 39% renewables in Germany's power sector by 2020 [21], translating to 10 €/MWh if the total cost is attributed to the increase in renewable generation. For the US, the National Renewable Energy Laboratory (NREL) estimates grid investment costs to integrate 80% renewable electricity (of which half are VRE) to be about 6 $ per MWh of VRE [22]. Holtinen et al. [12] review a number of European wind integration studies and shows a range of 50–200 €/kW at shares below 40%, which translates to 2–7 €/MWh.¹ In summary, grid costs might be slightly higher than balancing costs but still small compared to generation costs of wind.

Third, the temporal variability of wind and solar has two impacts. The first one is increased ramping and cycling requirements of conventional plants because they need to adjust their output more often, with steeper ramps and in a wider range of installed capacity. This seems to be of minor importance. Studies estimate very low costs [20], [21], [22] or find that ramping and cycling requirements are easily met even at high shares of VRE [23], [24], [25]. However, even if power plants could perfectly ramp and cycle, variability would still impose an important second impact. Because electricity demand is fairly price-inelastic and electricity cannot easily be stored, demand needs to be covered at the time it arises. Thus, the temporal matching of VRE supply profiles with demand is crucial to their integration. Designated integration studies tend to neglect this impact and focus on balancing, grid, ramping and cycling, while other less technical and more economic studies implicitly account for it. They find a significant economic consequence: variability reduces the marginal value of wind from about 110% of the average electricity price to about 50–80% as wind increases from zero to 30% of annual electricity consumption [18], [26], [27], [28]. It is this aspect of variability that is the focus of this paper.

This paper contributes to understanding the impact of wind and solar variability on power systems, specifically, the impact of the temporal matching of VRE supply and demand profiles. The tool we use is the residual load duration curve (RLDC), which is usually applied for illustration purposes. RLDC is a purely physical concept, which only requires demand and VRE supply data, yet it captures the relation of the different temporal profiles of wind and solar supply and demand and delivers the relevant economic aspects of major integration challenges. We define three challenge variables that represent fairly independent impacts of variability on the structure of the RLDC. We aim to analyze and compare integration challenges by estimating these variables in a comprehensive analysis for different shares of wind and solar and for two regions, Germany and for a US region in Indiana. Only based on demand and VRE supply data, we derive essential insights that are independent of model assumptions and scenario framings. Our analysis is not meant to be a surrogate for a model analysis. Instead, the results can help in understanding and framing model analyses. In addition, this study can aid in parameterizing integrated assessment models (IAMs) that cannot explicitly represent the short-term variability of wind and solar.

And to be clear, although this study addresses challenges of integrating VRE into current and future power systems, it should be emphasized that these challenges are not inherently a characteristic of VRE itself. Instead, these challenges depend on both VRE properties and the ability of the system to accommodate VRE. This means that the costs associated with VRE integration should not entirely be attributed to VRE generators. As future systems are likely to adapt in response to VRE deployment, the challenges described in this paper will reduce. One example of such a system adjustment is the changing role of the demand side. Power demand will presumably go from being variable and requiring flexibility to a source of flexibility in the future. Hereby, demand and supply will become more integrated, i.e., demand-side options will be able to shift demand in response to variations of renewable supply. As a results, the challenges of integrating VRE decrease.

The paper is structured as follows. The next section introduces the methodology for defining integration challenges using RLDCs. Section 3 provides results of our analysis and Section 4 provides a discussion of our results and conclusions.