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The Optimal Share of Variable Renewables: How the Variability of Wind and Solar Power affects their Welfare-optimal Deployment

  • This paper estimates the welfare-optimal market share of wind and solar power, explicitly taking into account their output variability. We present a theoretical valuation framework that consistently accounts for the impact of fluctuations over time, forecast errors, and the location of generators in the power grid on the marginal value of electricity from renewables. Then the optimal share of wind and solar power in Northwestern Europe's generation mix is estimated from a calibrated numerical model. We find the optimal long-term wind share to be 20%, three times more than today; however, we also find significant parameter uncertainty. Variability significantly impacts results: if winds were constant, the optimal share would be 60%. In addition, the effect of technological change, price shocks, and policies on the optimal share is assessed. We present and explain several surprising findings, including a negative impact of CO2 prices on optimal wind deployment.
Metadaten
Document Type:Article
Language:English
Author(s):Lion HirthORCiD
Parent Title (English):The Energy Journal
ISSN:1944-9089
Publication year:2015
Publishing Institution:Hertie School
First Page:127
Last Page:162
DOI:https://doi.org/10.5547/01956574.36.1.6
Release Date:2017/08/02
Tag:Competitiveness; Cost-benefit analysis; Numerical optimization; Solar power; Variable renewables; Wind power
Volume:36
Issue:1
Hertie School Research:Centre for Sustainability
Licence of document (German):CC BY-NC-ND 3.0
Licence of document (German):Metadaten / metadata
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