Cost of Valued Energy for design of renewable energy systems

Simpson, Juliet G.; Loth, Eric; Dykes, Katherine

doi:10.1016/j.renene.2020.01.131

Cited by 45 publications

(20 citation statements)

References 27 publications

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“…Among others, it can be cited its different definitions [35] and the usual lack of transparency in the needed assumptions heavily impacting the LCOE outcomes [36]. Consequently, the use of more sophisticated metrics is advocated [36,37]. Mid way between these points, a comparison of auction prices with LCOEs can be found in [30], although a warning is issued on the implicit limitations.…”

Section: Methodsmentioning

confidence: 99%

Renewable Energy Auction Prices: Near Subsidy-Free?

et al. 2020

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The latest trend of low record bid prices in renewable energy auctions has raised concerns on the effective deployment of the winning projects. A survey of recent auction data from several countries, technologies and remuneration designs is analysed and compared with the corresponding levelised costs of energy (LCOEs) to draw first insights on their viability. A critical assessment of the ability of the LCOE for determining the adequate bid level is then performed and the preliminary unviable results of selected mature technologies are further investigated using improved profitability metrics as the project and equity net present value (NPV) and internal rate of return (IRR). As representative examples, the analysed Danish 2019 onshore wind and photovoltaics (PV) auctions require very specific scenarios to become viable, which cast doubts on their effective implementation. Under the assumptions of a realistic base case, the sensitivity analysis revealed that either 59% of decrease in the weighted average cost of capital (WACC), or 37% of discount on the investment cost or a 3.6% annual increment in the mean market price is needed for achieving the NPV break-even in the onshore wind case. Likewise, the PV case is unprofitable whatever the WACC may be, and either a 60% discount on the investment cost or a 6.8% annual increment in the mean market price is needed for the NPV to break-even. Although some projects could be relying on indirect revenues or additional sources of incomes beyond the auction support, it remains to see if they are finally materialised.

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Section: Methodsmentioning

confidence: 99%

Renewable Energy Auction Prices: Near Subsidy-Free?

et al. 2020

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“…Beyond these system‐level options, wind technology manufacturers and developers have their own set of options to increase the value of their product. These may become more prevalent as wind penetrations increase and as wind power plants are increasingly exposed to varying power market prices (e.g., because of the phase‐out of fixed‐price support regimes) (Simpson et al, 2020). Examples of “value‐tailored” design choices include high‐capacity‐factor (i.e., low specific power) wind turbines (Bolinger et al, 2020; Dalla Riva et al, 2017; Hirth & Müller, 2016; Johansson et al, 2017; Wiser, Millstein, et al, 2020), low‐wind speed turbines, overplanting strategies (Wolter et al, 2020), and hybridization (e.g., by incorporating solar photovoltaics or storage) (Dykes, 2020; Gorman et al, 2020).…”

Section: The Growing Importance Of Valuementioning

confidence: 99%

“…These may become more prevalent as wind penetrations increase and as wind power plants are increasingly exposed to varying power market prices (e.g., because of the phase-out of fixed-price support regimes) (Simpson et al, 2020). Examples of "value-tailored" design choices include high-capacity-factor (i.e., low specific power) wind turbines (Bolinger et al, 2020;Dalla Riva et al, 2017;Hirth & Müller, 2016;Johansson et al, 2017;, low-wind speed turbines, overplanting strategies (Wolter et al, 2020), and hybridization (e.g., by incorporating solar photovoltaics or storage) (Dykes, 2020;Gorman et al, 2020). Many of these choices entail higher LCOE (e.g., because larger blades are used) but can result in higher market prices, and hence deliver an improved economic offering of the wind power asset.…”

Section: The Growing Importance Of Valuementioning

confidence: 99%

Wind power costs driven by innovation and experience with further reductions on the horizon

Beiter

Cooperman

Lantz

et al. 2021

WIREs Energy & Environment

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The costs of wind power have declined to levels on par with or below those of conventional sources in many parts of the world. Wind power has become one of the fastest‐growing sources of new electricity generation. We take stock of wind power cost evolution over the past 20 years, review methodologies commonly used for cost assessment, discuss the potential for continued cost reduction, and identify anticipated cost and value drivers. Our scope includes both onshore and offshore wind technologies. We draw from a vast body of literature on these topics to highlight key trends, approaches, and limitations. Furthermore, we discuss strategies for wind power assets to enhance their marginal economic value to the broader power system and consumers. We identify a myriad of factors that are expected to influence the future cost and value of wind power, including siting, project scale, turbine size, operational synergies, commodity prices, advancements in turbine technologies, enhanced management of the wind resource, and novel control technologies that provide value for the electricity grid. Because the common methods for forecasting future costs each have their own strengths and weaknesses, we find the best insights are elicited from a combination of methods. Overall, researchers and analysts anticipate further sizable cost reductions for onshore and offshore wind. Midrange forecasts for levelized cost of energy in 2050 are generally between $20 and $30/MWh for onshore wind and $40 and $60/MWh for offshore wind, a reduction to approximately half of today's levels. Optimistic forecasts anticipate these levels as early as 2030. This article is categorized under: Wind Power > Economics and Policy

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“…Nondispatchable power plants are grouped according to their energy source and defined as "must-runs". Power plants whose generation depends only on their availability are modeled with variable costs of zero (Šumbera and Dlouhý, 2015). A disadvantage of this methodology is that a set of all generation units or at least a representative dataset must be available.…”

Section: Existing Electricity Price Forecasting Modelsmentioning

confidence: 99%

“…For the implementation of weather-dependent electricity generation technologies such as solar panels and WTs, the underlying weather time series data are of fundamental importance. In this paper, the influences of wind speed and solar radiation are assumed according to previous studies of Staffell and Pfenninger (Staffell and Pfenninger, 2016;Pfenninger and Staffell, 2016). The authors use weather data from global reanalysis models and satellite observations to generate synchronized national time series data for solar and wind generation capacity factors for the years 1985 to 2016 at an hourly resolution.…”

Section: Hourly Renewable Generation Capacity and Weather Time Series Datamentioning

confidence: 99%

Future economic perspective and potential revenue of non-subsidized wind turbines in Germany

et al. 2021

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Abstract. Fixed feed-in tariffs based on the Renewable Energy Act grant secure revenues from selling electricity for wind turbine operators in Germany. Anyhow, the level of federal financial support is being reduced consecutively. Plant operators must trade self-sufficiently in the future and hence generate revenue by selling electricity directly on electricity markets. Therefore, uncertain future market price developments will influence investment considerations and may lead to stagnation in the expansion of renewable energies. This study estimates future revenue potentials of non-subsidized wind turbines in Germany to reduce this risk. The paper introduces and analyses a forecasting model that generates electricity price time series suited for revenue estimation of wind turbines based on the electricity exchange market. Revenues from the capacity market are neglected. The model is based on openly accessible data and applies a merit-order approach in combination with a simple agent-based approach to forecast long-term day-ahead prices at an hourly resolution. The hourly generation profile of wind turbines can be mapped over several years in conjunction with fluctuations in the electricity price. Levelized revenue of energy is used to assess both dynamic variables (electricity supply and price). The merit-order effect from the expansion of renewables as well as the phasing out of nuclear energy and coal are assessed in a scenario analysis. Based on the assumptions made, the opposing effects could result in a constant average price level for Germany over the next 20 years. The influence of emission prices is considered in a sensitivity analysis and correlates with the share of fossil generation capacities in the generation mix. In a brief case study, it was observed that current average wind turbines are not able to yield financial profit over their lifetime without additional subsidies for the given case. This underlines a need for technical development and new business models like power purchase agreements. The model results can be used for setting and negotiating appropriate terms, such as energy price schedule or penalties for those agreements.

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Cost of Valued Energy for design of renewable energy systems

Cited by 45 publications

References 27 publications

Renewable Energy Auction Prices: Near Subsidy-Free?

Renewable Energy Auction Prices: Near Subsidy-Free?

Wind power costs driven by innovation and experience with further reductions on the horizon

Future economic perspective and potential revenue of non-subsidized wind turbines in Germany

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