Next Generation Wind and Solar Power
From cost to value
Wind and solar photovoltaics (PV) are currently the fastest-growing sources of electricity
globally. A "next generation" phase of deployment is emerging, in which wind and solar
PV are technologically mature and economically affordable.
The success of variable renewable energy (VRE) is also bringing new challenges to
the fore. Electricity generation from both technologies is constrained by the varying
availability of wind and sunshine. This can make it difficult to maintain the necessary
balance between electricity supply and consumption at all times.
As these variable renewables enter this next generation of deployment, the issue of
system and market integration becomes a critical priority for renewables policy and
energy policy more broadly. The paper highlights that this will require strategic
action in three areas:
- System-friendly deployment, aiming to maximise the net benefit of wind and solar
power for the entire system
- Improved operating strategies, such as advanced renewable energy forecasting and
enhanced scheduling of power plants
- Investment in additional flexible resources, comprising demand-side resources, electricity
storage, grid infrastructure and flexible generation
In addition, the paper argues that unlocking the contribution of system-friendly deployment
calls for a paradigm shift in the economic assessment of wind and solar power. The
traditional focus on the levelised cost of electricity (LCOE) – a measure of cost
for a particular generating technology at the level of a power plant – is no longer
sufficient. Next-generation approaches need to factor in the system value of electricity
from wind and solar power – the overall benefit arising from the addition of a wind
or solar power generation source to the power system. System value is determined by
the interplay of positives and negatives including reduced fuel costs, reduced carbon
dioxide and other pollutant emissions costs, or higher costs of additional grid infrastructure.
In addition to general analysis and recommendations, the paper also includes summaries
of three case studies in China, Denmark and South Africa.
Published on January 05, 2017