The other day I read an article on the widely known CleanTechnica renewable energy news and analysis website about why is it unnecessary to integrate energy storage technologies to the power grid. This reminded me of the first few months of being a young researcher when I was struggling with realizing how different the opinion of engineers, energy system planners and economists can be about a certain question and why is it important to urge and ensure the discussion between these groups of experts and researchers. In this post I will give you two examples which can show how different our approaches can be even though we aim to achieve the same goal.
The article argues in favor of the significance of increasing the interconnection between national and sub-national grid systems instead of the establishment of storage systems. This extension can promote the trade between regions where high renewable energy capacities have been installed and – due to the intermittent power production – the frequency of oversupply and over-demand periods increases. When the electricity markets are liberalized, the trade is not only derived by the physical rule that the electricity demand has to be met by the supply in every region and moment – otherwise the power grid collapses-, but the trade is also motivated by spatial arbitrage, that is, the market clearing prices have to be equal in adjacent, highly linked power grids (this concept is also called law of one price). (van Kooten, 2014)
I agree that the extension of the interconnection capacity is crucial to integrate further renewable power generators, but I think it is also important to analyze and to compare the shadow (marginal) price of capacity expansion and the average (marginal) cost of storing a unit of electricity. By doing this, we can find an optimal “allocation” between the interconnection and energy storage capacity expansions, that can support the integration of renewable energy sources in the most cost-effective way.
The article discusses an other solution to integrate high renewable energy capacity that is to rely on backup generators and reserve capacities. These power plants can ramp up fast enough to complement the decreasing renewable energy production, or to ramp down fast when additional (unexpected) intermittent power is generated.
Figure 1 Load Duration Curve and Wind Power-adjusted Load Duration Curve for West Denmark in 2014. Own compilation, based on the data from energinet.dk.
The existence of backup generators is important but we also have to highlight that the further emission from these generators will increase the CO2 emission of the power grid, therefore the marginal abatement cost of CO2 emission will increase. (Rácz et al, 2013)
Furthermore, we should also think about the option to let the renewable energy sources be dispatchable so the transmission system operation should not have to accept the excess wind power, therefore the market clearing price would not become too low due to the oversupply, which prevents the baseload and backup generators to cover their short-run (marginal) costs. Figure 1 depicts the load duration curve (descended-ordered load curve) and the wind power adjusted load duration curve (load minus wind power production) for the West Denmark region in 2014. From this figure we can see that there were more than 1200 hours throughout 2014 when excess wind power was produced.
The integration of energy storage into the power system can contribute to decrease CO2 emission by replacing most of the backup generators and supplementing renewable energy production.
I aimed to discuss these questions in order to show how different our approach can be when we are looking at the same problem from different angles and with different mindsets. In my opinion, it would be really beneficial for all of us, if researchers from different disciplines sat together and use the synergy of our diversity, since the goal is the same; drastically reducing the anthropogenic CO2 emission level.
References
Data about the Danish Power System is available at the Danish TSO’s (Energinet.dk) website: http://energinet.dk/EN/El/Engrosmarked/Udtraek-af-markedsdata/Sider/default.aspx, accessed: 2016.01.14
EnergyPLAN (2015) Advanced Energy System Analysis Computer Model, Department of Development and Planning, Aalborg University, accessed: 2016.01.14 Available from: http://www.energyplan.eu/
van Kooten, G.C. (2014) Applied Welfare Analysis in Resource Economics and Policy, Working Paper 2014-05, Resource Economics & Policy Analysis Research Group (REPA), University of Victoria, Victoria Canada. Available from: https://web.uvic.ca/~repa/publications/REPA%20working%20papers/WorkingPaper2014-05.pdf
Rácz, V.J., Yadav, P., Vestergaard, N. (2013) Integration of Wind Power into the Danish Power System, ISSN: 1399-3232, IME report 14/13, Department of Environmental and Business Economics, University of Southern Denmark, Esbjerg, Denmark
Mereconomics 