IEA: The Cost and Value of Variable Renewables – 1/3/17

Renewable power generation has spiked in recent years thanks to sharply falling costs of variable renewables like solar and wind. According to the IEA, between 2008 and 2015, the average cost of land-based wind decreased by 35% while the cost of solar PV dropped by almost 80%.

This growth has raised a new challenge for power-system operators and regulators: power systems, including both policies and infrastructure, are not always ready to handle increased variable supplies.

A new IEA publication, Next Generation Wind and Solar: From Cost to Value, describes this challenge and possible solutions.

The challenge depends largely on two things: the amount of variable renewables on the power sector and the flexibility of the power system as a whole.

Integrating the small amounts of variable renewables into generation poses few problems but, beyond these levels, power systems must be adapted and upgraded handle power generation with a variable nature.

The IEA sees the measurement of system value as particularly important issue. The traditional focus on the levelized cost of electricity (LCOE) – a measure of cost for a particular generating technology at the level of a power plant – in particular comes up as something to be updated to better convey the benefits of adding more wind and solar power generation to the grid. The IEA recommends that system value include factors such as reduced fuel costs, reduced carbon dioxide emissions and other pollutant costs, or higher costs of additional grid infrastructure.

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