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Additional Balancing Capacities and Balancing Costs: Overall Results from System Studies

The amount of additional reserve capacity and the corresponding costs when increasing wind power penetration are being explored in many countries by means of system studies carried out by power engineers. This involves the simulation of system operation, whereby the effect of increasing amounts of wind power is analysed for different scenarios of generation mix. In 2006, international cooperation was established under the IEA Task 25, to compare and analyse the outcome of different national system studies. Task 25’s first report provides general conclusions, based on studies from Denmark, Finland, Norway, Sweden, Germany, Ireland, Spain, The Netherlands, Portugal, the UK and the USA.

Both the allocation and the use of reserves imply additional costs. The consensus from most studies carried out so far is that the extra reserve requirements needed for larger wind power penetrations are already available from conventional power plants in the system, so in fact no new reserves are required. This means that only the increased use of dedicated reserves, or increased part-load plant requirement, will create extra costs for the energy part.

The studies calculate additional costs, compared to a situation without wind power. Most results are based on comparing the costs of system operation without wind power and then adding varying amounts of wind power into the equation. The costs of variability are also addressed, by comparing simulations assuming constant (flat) wind energy to those with varying wind energy.

 

Figure 3.1: Results for the Increase in Reserve Requirement due to Wind Power, as Summarised by IEA Task 25

Note: Major factors explaining the difference in results between various studies are assumptions with respect to forecast uncertainties (resulting from length of forecast horizon/gate closure time) and the geographical size of the area considered.

Source: Holttinen et al. (2007)

Estimates of the extra cost of reserves (mainly secondary load following reserves) suggest 1–4 €/MWh for a wind power penetration of up to 10 per cent of gross consumption. This cost is normalised per MWh of wind energy produced. The cost per MWh at consumption is around 0.1-0.4 € cents, at 10 per cent wind energy penetration, which is typically around 0.1 of the electricity consumption price. These findings indicate that the additional system operation costs, in terms of balancing additional variability due to large-scale integration of wind power, are only a small fraction (typically less than 10 per cent) of the generation costs of wind power. The effect on the consumer price is close to zero.