Techno-Economic Screening Analysis for Variable Renewable Energy Sources– A Forward-Looking Alternative for a Seamless Baseload Generation Retirement

By Michael Emmanuel, Ramesh Rayudu, and Ian Welch

The dominating trend of variable renewable energy (VRE) sources continues to underpin the early retirement of baseload power generating sources such as coal, nuclear, and natural gas steam generators. However, the need to maintain system reliability under dynamic environmental and market conditions requires advanced levels of coordination and collaboration amongst stakeholders. Although maintaining a diverse generation portfolio is necessary for grid reliable operations, identifying the best VRE resources from both economic and engineering perspectives is pivotal in ensuring minimum overall system cost, reliability improvement, and increased resource diversity. The engineering screening entails capacity and reliability analysis coupled with highlights on timing, severity and location of constraints on the grid. With respect to the technical analysis, the economic screening determines the baseline avoided cost and cost-effectiveness of the VRE sources. Further, uncertainty analysis can provide the required refinement for the entire analysis to give a robust recommendation of the VRE choice.

In a quest to assess the current electricity market and its reliability, the US Department of Energy (DOE) staff report addressed the current trajectory of wholesale electricity markets and the degree to which policies, mandates, and regulatory frameworks underpin the early retirement of baseload power plants.

The evolution of the electricity grid and its wholesale markets is caused by a convergence of various factors and a host of policy issues which present a challenge and an opportunity. Key factors include the large scale penetration of highly variable renewable energy (VRE) sources (e.g., wind and solar), reduced load demand and a sustained reduction in natural gas prices. As the market continues to evolve in the face of high VRE penetration, wholesale energy prices are projected to fall creating intense economic pressure and the need to justify the further investment in baseload resources. While there is an increasing deployment of VRE sources in some regions coupled with dispatchable generating resources such as the natural gas-fired combined-cycle plants to balance out VRE intermittency and to meet the system baseload, the premature retirement of baseload power generation without a holistic analysis and multiple perspectives assessment of VRE units can compromise grid reliability and resilience.

It is quite apparent that maintaining a diverse generation portfolio is pivotal for reliable grid operations, however, identifying the best VRE resources from both economic and engineering perspectives within environmental (i.e. greenhouse gas emission) constraints is critical. This multidimensional assessment of interrelated VRE technologies is essential for creating a sustainable roadmap and solution.

The VRE assessment methodology for engineering screening comprises optimal location and timing of resources coupled with reliability analysis over an entire year rather than single snap shot evaluations in time. Timing and optimality of VRE resources are two critical factors for a robust techno-economic assessment of VRE generation. While optimality deals with sizing and siting, timing is a function of the coincidence between load demand and VRE resources peaks. Also, the coincidence factor is essential in quantifying the value of VRE resources and characterizing their patterns of operation. Detailed reliability analysis entails customers’ reliability enhancement, estimation of a decrease in expected unserved energy and period of improved reliability with VRE deployment.

In a recent report by the electric power research institute (EPRI), four major findings concerning engineering analysis were documented. They include:

• The impact of temporal resolution in enhancing the capabilities of power system capacity planning tools. Hourly and sub-hourly time scales coupled with unit-level details such as startup/shutdown costs are key to a more accurate representation of the network response to high penetration of VRE resources.
• For a large disperse area with high renewable potentials like the U.S., there is a need to have an enhanced description of transmission network and power flow between various sub-regions and other non-energy market commodities.
• A clear modelling of the dynamic end-use load demand pattern as a result of VRE deployment and various demand response programs.
• Development of uncertainty models for handling high-impact low probability events. This also involves sensitivity analysis with respect to changing parameters such as distribution capacity value, market price forecast and VRE costs for a robust recommendation of the most suitable VRE option.

A comprehensive VRE project economic study, apart from determining the baseline avoided costs and cost-effectiveness of resources, assesses the impact of its integration on all the stakeholders such as the utility, VRE owner, customer and society. A unilateral perspective in performing an economic screening for VRE can give an incomplete representation of the economic impact of VRE integration. Also, there is a need for power system economy-wide models to have a comprehensive representation of the entire system, and not only on macro levels. The extant literature has proposed the merging of the “bottom-up” models of the power system within “top-down” macro-economic representations as a possible alternative to the silo unit in the economy-wide modelling.

Further, in the context of the above discussion, endogenous analysis of novel VRE technologies is required for sustainable transition of the electric power system. Rather than considering VRE technologies as an autonomous process, this type of analysis takes into consideration other variables such as techno-economic implications within environmental constraints and societal and policy issues. The taxonomy of “technology-push” and “demand pull” can be very useful as a VRE environmental policy instrument. Technology-push represents instruments that affect the supply of new knowledge such as the research and development funding as a major contributor to a robust knowledge base for a seamless integration of VRE technologies. The demand-pull policy instruments impact the market size for VRE technologies such as green certificates and feed-in tariffs. Both policy instruments are pivotal in determining the cost effectiveness and technical feasibility of any VRE technology.

In conclusion, reliable, affordable and sustainable electricity is pivotal to sustain the modern society and economy. The current retirement of baseload generations as a result of increasing integration of novel VRE technologies without a multidimensional assessment could adversely impact all the stakeholders of the next-generation electricity grid. An endogenous analysis to ensure accurate characterization of the grid transition is now imperative for its long-term capacity planning.

This article was edited by Jose Medina

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