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NREL Assesses Costs of Adding New Generation to Existing Power Systems

September 29, 2015

Much effort has been made to assess the costs associated with integrating variable generation (VG) such as wind and solar into an existing power system, as these power sources increase the variability and uncertainty that must be managed on the system. However, seldom do we think about what happens to system costs when new baseload generation is added to an existing system, or when generation self-schedules. What happens when a highly flexible combined-cycle plant is added? Do system costs go up, or do they go down? Are other, non-cycling, maintenance costs impacted?

NREL was commissioned by the Wind Program of the U.S. Department of Energy to investigate three integration cost-related questions: (1) How does the addition of new generation affect a power system's operating costs? (2) How do changes in the generation mix and system operating parameters and procedures affect costs? and (3) How do increases in VG impact the accuracy of natural gas orders?

The study, designed and executed in collaboration with a group of industry experts, examined how production costs vary with the addition of new baseload generation, increases in the amount of VG, and changes in generation mix, gas prices, and self-scheduling practices. Four aspects of production costs were investigated: generator cycling costs (i.e., start-up, shutdown, and ramping-related costs), non-cycling variable operations and maintenance (VO&M) costs, reserves provisioning costs, and fuel costs. The key findings are summarized below.

Key Findings

New generation effects:

  • The addition of either VG or new baseload generation increased system-wide cycling costs.
  • Increases in VG had a negligible impact on overall maintenance costs because the decreases in system VO&M costs offset the increases in cycling costs. In contrast, new baseload generation increased both cycling costs and VO&M costs, leading to increased system-wide maintenance costs.
  • The largest effect on coal cycling costs occurred with the addition of new baseload generation rather than with the addition of VG.
  • The largest impact on combined-cycle cycling costs occurred in the medium penetration (20%) VG scenario.

Generation mix consequences:

  • Cycling costs increased with increasing coal penetration. (Costs were 54% higher in the 65% coal system than in the 15% coal system.)

Self-scheduling impacts:

  • Self-dispatching 50% of the coal fleet increased cycling costs 12% and generation costs 3%, and it shifted cycling costs to the generators that did not self-dispatch.

Gas order error results:

  • Gas order errors were found to increase with increasing VG penetration. At 40% VG, order errors exceeded 10% almost half the time.

Download the conference paper for a summary of the work: A Systematic Approach to Better Understanding Integration Costs: Preprint

Download the full report for the detailed study conclusions: A Systematic Approach to Better Understanding Integration Costs

—Devonie McCamey