Least-cost options for integrating intermittent renewables in low-carbon power systems

Abstract

Large power sector CO2 emission reductions are needed to meet long-term climate change targets. Intermittent renewable energy sources (intermittent-RES) such as wind and solar PV can be a key component of the resulting low-carbon power systems. Their intermittency will require more flexibility from the rest of the power system to maintain system stability. In this study, the efficacy of five complementary options to integrate intermittent-RES at the lowest cost is evaluated with the PLEXOS hourly power system simulation tool for Western Europe in the year 2050. Three scenarios to reduce CO2 emissions by 96% and maintain system reliability are investigated: 40%, 60% and 80% of annual power generation by RES. This corresponds to 22%, 41% and 59% of annual power generation by intermittent-RES. This study shows that higher penetration of RES will increase the total system costs: they increase by 12% between the 40% and 80% RES scenarios. Key drivers are the relatively high investment costs and integration costs of intermittent-RES. It is found that total system costs can be reduced by: (1) Demand response (DR) (2-3% reduction compared to no DR deployment); (2) natural gas-fired power plants with and without Carbon Capture and Storage (CCS) (12% reduction from mainly replacing RES power generation between the 80% and 40% RES scenarios); (3) increased interconnection capacity (0-1% reduction compared to the current capacity); (4) curtailment (2% reduction in 80% RES scenario compared to no curtailment); (5) electricity storage increases total system costs in all scenarios (0.1-3% increase compared to only current storage capacity). The charging costs and investment costs make storage relatively expensive, even projecting cost reductions of 40% for Compressed Air Energy Storage (CAES) and 70% for batteries compared to 2012. All scenarios are simulated as energy only markets, and experience a "revenue gap" for both complementary options and other power generators: only curtailment and DR are profitable due to their low cost. The revenue gap becomes progressively more pronounced in the 60% and 80% RES scenarios, as the low marginal costs of RES reduce electricity prices.