Optimization of the Renewable Power Grid: Calibration and Application

Date

2022-10-06

Authors

Duan, Jun

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Abstract

The goal of this study is to determine the economic implications of incorporating intermittent renewable energy into current power systems. The study also considers how to achieve an optimal mix of generating assets with renewable power, as well as the costs and advantages of using renewable energy sources to reduce CO2 emissions. Furthermore, this study examines how renewable energy exacerbates the "missing money" problem, which is a critical problem in electricity market design. The last part of this research is devoted to the calibration of the hybrid electricity grid model. We adopt positive mathematical programming (PMP) to calibrate the quadratic cost function for fossil fuel power plants. The calibrated model enables us to better analyze the impact of renewable energy on the electricity market. We find that due to the intermittency of wind and solar power, renewable energy could replace part of the peak load capacity like gas turbines but is not able to replace most of the base load capacity like coal capacities. The unintended consequences are that to eliminate the coal base load capacity, other forms of baseload capacities such as nuclear or hydropower capacity are necessary to incorporate the intermittent renewable power. Moreover, the capacity factors of remained peak load capacities and newly built base load capacities declined. Further support policies for maintaining the capacity adequacy standard are necessary for a reliable hybrid electricity market.

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Keywords

energy economics, renewable energy, Climate change, calibration of electricity grid model, intermittency and storage, wholesale power market, ossil fuels and externalities

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