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The observed cost of high penetration solar and wind electricity

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  • Blakers, Andrew
  • Stocks, Matthew
  • Lu, Bin
  • Cheng, Cheng

Abstract

High levels of variable solar and wind must be balanced with alternative generation, storage, transmission and demand management to ensure continuous availability of electricity. The cost of balancing has been disputed, which militates against mass deployment of solar and wind to mitigate climate change. Australia is installing solar and wind 10 times faster than the global per capita average which constitutes a natural experiment in the real cost of balancing. The National Electricity Market (NEM) and the state of South Australia have reached combined solar and wind energy penetrations of 24% and 70% respectively and are tracking towards 40% and 100% respectively in 2024–25. Investment in new balancing infrastructure is predominantly in pumped hydro (without new dams on rivers), batteries and transmission. The current (2021) and market futures (2024) spot price for electricity in the NEM and South Australia is about AUD$40 (∼US$30) per Megawatt-hour. This suggests that the balancing cost of high levels of solar and wind is modest.

Suggested Citation

  • Blakers, Andrew & Stocks, Matthew & Lu, Bin & Cheng, Cheng, 2021. "The observed cost of high penetration solar and wind electricity," Energy, Elsevier, vol. 233(C).
    • Handle: RePEc:eee:energy:v:233:y:2021:i:c:s0360544221013980
    DOI: 10.1016/j.energy.2021.121150
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    Cited by:

    1. Ashish Gulagi & Manish Ram & Dmitrii Bogdanov & Sandeep Sarin & Theophilus Nii Odai Mensah & Christian Breyer, 2022. "The role of renewables for rapid transitioning of the power sector across states in India," Nature Communications, Nature, vol. 13(1), pages 1-19, December.
    2. Ouyang, Tiancheng & Zhang, Mingliang & Wu, Wencong & Zhao, Jiaqi & Xu, Hua, 2023. "A day-ahead planning for multi-energy system in building community," Energy, Elsevier, vol. 267(C).
    3. Gilmore, Nicholas & Koskinen, Ilpo & van Gennip, Domenique & Paget, Greta & Burr, Patrick A. & Obbard, Edward G. & Daiyan, Rahman & Sproul, Alistair & Kay, Merlinde & Lennon, Alison & Konstantinou, Ge, 2022. "Clean energy futures: An Australian based foresight study," Energy, Elsevier, vol. 260(C).
    4. Mwampashi, Muthe Mathias & Nikitopoulos, Christina Sklibosios & Rai, Alan & Konstandatos, Otto, 2022. "Large-scale and rooftop solar generation in the NEM: A tale of two renewables strategies," Energy Economics, Elsevier, vol. 115(C).
    5. Hakan Acaroğlu & Fausto Pedro García Márquez, 2021. "Comprehensive Review on Electricity Market Price and Load Forecasting Based on Wind Energy," Energies, MDPI, vol. 14(22), pages 1-23, November.
    6. Ekaterina Bayborodina & Michael Negnevitsky & Evan Franklin & Alison Washusen, 2021. "Grid-Scale Battery Energy Storage Operation in Australian Electricity Spot and Contingency Reserve Markets," Energies, MDPI, vol. 14(23), pages 1-21, December.
    7. Icaza, Daniel & Borge-Diez, David & Galindo, Santiago Pulla, 2022. "Analysis and proposal of energy planning and renewable energy plans in South America: Case study of Ecuador," Renewable Energy, Elsevier, vol. 182(C), pages 314-342.
    8. Burke, Paul J. & Beck, Fiona J. & Aisbett, Emma & Baldwin, Kenneth G.H. & Stocks, Matthew & Pye, John & Venkataraman, Mahesh & Hunt, Janet & Bai, Xuemei, 2022. "Contributing to regional decarbonization: Australia's potential to supply zero-carbon commodities to the Asia-Pacific," Energy, Elsevier, vol. 248(C).
    9. Flottmann, Jonty & Wild, Phillip & Todorova, Neda, 2024. "Derivatives and hedging practices in the Australian National Electricity Market," Energy Policy, Elsevier, vol. 189(C).
    10. Qin, Peijia & Tan, Xianlin & Huang, Youbin & Pan, Mingming & Ouyang, Tiancheng, 2023. "Two-stage robust optimal scheduling framework applied for microgrids: Combined energy recovery and forecast," Renewable Energy, Elsevier, vol. 214(C), pages 290-306.

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