Since 2002, the annual energy auctions created and administered by the New Jersey Board of Public Utilities have proven to be an innovative and successful way to meet our state's growing demand...
"lay to rest one of the major concerns often expressed about wind power: that a wind plant would need to be backed up with an equal amount of dispatchable generation. It is now clear that, even at moderate wind penetrations, the need for additional generation to compensate for wind variations is substantially less than one-for-one and is often closer to zero."
Nonetheless some costs do exist, and more detailed studies are needed to quantify them. A second generation of studies, currently under way, should provide much more quantification to the tentative conclusions that can be drawn from the previous studies and international experience:
- The limits to integration of wind on a utility grid are economic, not technical (the technical limits, based on European experience, are reached at approximately 40 percent penetration on an annual average energy basis);
- Costs are minimal (say, <$2/MWh) at low penetration, modest (say, ~$5/mwh) at medium penetration, and mitigatable at high penetration levels with a hockey-stick shape;
- The value of low, medium, and high principally depends on:
-size of region
-type of tariff
-stiffness of grid 3
-flexibility of other generation;
- The order of mitigation actions is generally: software/IT (wind forecasting being a principal tool); curtailment of wind output during extreme minimum load hours; (as medium penetrations are reached) transmission investment; (at high penetrations only) new other generation to back up wind; and finally, storage. It is almost never cost-effective to "firm the wind." The grid itself, with all its diversity, is the best storage;
- The economic limit is reached when wind curtailment is too high and the next reasonable transmission investment is not justifiable.
As an example, New York is average to above-average on this scale. The region is relatively large, and flexible hydropower and natural gas make up an important part of the generation mix. Some special transmission and operating rules will need to be put in place-just as special rules exist to this day to accommodate the specific characteristics of New York's nuclear power plants. But New York should have no difficulty reaching 15 to 25 percent wind penetration without major capital investment to deal with variability. As the first phase of a study funded by the New York Independent System Operator and New York State Energy Research and Development Authority recently concluded, meeting its renewables portfolio standard requirement of increasing the percentage of electricity supplied by renewables to 25 percent by 2012, up from about 17 percent today, is clearly feasible. Phase II of that study, to detail required measures, is due out by the end of 2004. Similar studies are under way in California and Minnesota.
More generally, tariffs that impute a high percentage of the fixed costs of building and operating the transmission system to only the last generator on line or that impose significant non-cost-based penalties for deviations from standard generator behavior tend to impute high wind-penetration costs. More modern tariffs that conform to well-founded economic principles of only charging variable costs to individual transactions while sharing fixed costs over all loads and resources, and that use incentives instead of penalties