Impact analysis of variable renewable energy integration on total system costs and electricity generation revenue and impact mitigation

Abstract

Variable renewable energy (VRE) integration creates additional costs, called integration costs. These costs have grown with VRE penetration, potentially increasing the total system costs delivered to customers (direct integration costs) and decreasing electricity generation revenue, discouraging investment by generators (indirect integration costs). Thus, integration costs can serve as an economic barrier to the integration of high VRE shares. The main objective of this dissertation is to propose a novel method of determining the impacts of VRE integration on total system costs and electricity generation revenue. With this method, the optimal generation mix and optimal generation schedules at the specific VRE penetration level in different study cases were provided. The impacts of VRE integration on total system costs and electricity generation revenue were highlighted, alongside the direct and indirect integration costs. Moreover, the profitability of electricity generation was evaluated. Aside from its main objective, this dissertation more comprehensively includes assessments of VRE impact mitigation through enhancing the flexibility of existing power plants and the use of a bidding strategy. To determine VRE-relevant plans and policies, electrical system planners and policymakers must prioritize the severity of integration costs grown with VRE penetration, which impacts total system costs and electricity generation revenue. Both energy markets and capacity mechanisms are crucial for the profitability of generators. Moreover, system planners and policymakers could consider several ways to mitigate the impact of VRE integration. For one, enhancing system flexibility decreases the total system cost. Second, bidding strategies could also help generators manage energy market challenges.