Strategies for Mitigating the Reduction in Economic Value of Variable Generation with Increasing Penetration Levels

Executive Summary Overview Previously, Mills and Wiser [2012] found a decline in the marginal economic value of different variable generation (VG) technologies with increasing penetration levels. Economic value in this case is primarily based on the avoided costs form other non-renewable power plants in the power system including capital investment cost, variable fuel, and variable operations and maintenance (O&M). That previous analysis, the " valuation report, " assumed only one VG technology was added at a time, that VG plants would be built at specific sites, that the commitment decisions for all thermal power plants except combustion turbines were fixed in the day-ahead market, that demand was largely inflexible, and that new bulk power storage facilities would be expensive to build. In this report, the " mitigation report, " we use the same model and data to evaluate individual options that have the potential to stem the decline in the marginal value of VG with increasing penetration levels. We measure the effectiveness of mitigation measures by comparing the marginal value of VG once a mitigation measure is implemented to the marginal value in the Reference scenario based on the valuation report without the mitigation measure, and at the same VG penetration level. A positive change in the value of the VG technology with the mitigation measure indicates that implementing the measure increases the value above the value found in the valuation report for the same level of penetration. Where the mitigation measures are found to increase the value of VG, we also want to understand if the mitigation measures themselves are more or less economically attractive with increasing penetration of VG. Ideally, a mitigation measure both increases the value of VG and becomes more economically attractive at the same time. We therefore develop metrics to assess the economic attractiveness of mitigation measures and examine the change in those metrics with increasing VG penetration. We only consider the benefits of mitiga-tion measures, not the costs of implementing the measure, so our results only reflect part of the information required to conduct a full cost/benefit analysis of mitigation measures. The valuation report examined four VG technologies: wind, single-axis tracking photovoltaics (PV), and concentrating solar power (CSP) with and without thermal energy storage. 1 The changes 1 CSP without thermal storage is referred to as CSP 0 and CSP with 6 hours of thermal storage as CSP 6. in the value of PV …