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System-friendly wind power

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  • Hirth, Lion
  • Müller, Simon

Abstract

Previous studies find that the economic value of electricity (USD/MWh) generated by wind power drops with increasing market share. Different measures can help mitigate the value drop, including electricity storage, flexible conventional plants, expansion of transmission, and demand response. This study assesses another option: a change in design of wind power plants. “Advanced” wind turbines that are higher and have a larger rotor compared to rated capacity (lower specific rating) generate electricity more constantly than “classical” turbines. Recent years have witnessed a significant shift towards such advanced technology. Our model-based analysis for Northwestern Europe shows that such design can substantially increase the spot market value of generated electricity. At a 30% penetration rate, the value of 1MWh of electricity generated from a fleet of advanced turbines is estimated to be 15% higher than the value of 1MWh from classical turbines. The additional value is large, whether compared to wind generation costs, to the value drop, or to the effect of alternative measures such as electricity storage. Extensive sensitivity tests indicate that this finding is remarkably robust. The increase in bulk power value is not the only advantage of advanced turbines: additional benefits might accrue from reduced costs for power grids and balancing services. To fully realize this potential, power markets and support policies need to be appropriately designed and signal scarcity investors.

Suggested Citation

  • Hirth, Lion & Müller, Simon, 2016. "System-friendly wind power," Energy Economics, Elsevier, vol. 56(C), pages 51-63.
    • Handle: RePEc:eee:eneeco:v:56:y:2016:i:c:p:51-63
    DOI: 10.1016/j.eneco.2016.02.016
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    References listed on IDEAS

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    More about this item

    Keywords

    Wind power; Variable renewables; Market value; Power market modeling;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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