Technological learning and renewable energy costs: implications for US renewable energy policy

This paper analyzes the relationship between current renewable energy technology costs and cumulative production, research, development and demonstration expenditures, and other institutional influences. Combining the theoretical framework of ‘learning by doing’ and developments in ‘learning by searching’ with the fields of organizational learning and institutional economics offers a complete methodological framework to examine the underlying capital cost trajectory when developing electricity cost estimates used in energy policy planning models. Sensitivities of the learning rates for global wind and solar photovoltaic technologies to changes in the model parameters are tested. The implications of the results indicate that institutional policy instruments play an important role for these technologies to achieve cost reductions and further market adoption.     

The economics of wind power with energy storage

We develop a nonlinear mathematical optimization program for investigating the economic and environmental implications of wind penetration in electrical grids and evaluating how hydropower storage could be used to offset wind power intermittence. When wind power is added to an electrical grid consisting of thermal and hydropower plants, it increases system variability and results in a need for additional peak-load, gas-fired generators. Our empirical application using load data for Alberta's electrical grid shows that costs of wind-generated electricity vary from $37 per MWh to $68/MWh, and depend primarily on the wind profiles of installed turbines. Costs of reducing CO₂ emissions are estimated to be $41–$56 per t CO₂. When pumped hydro storage is introduced in the system or the capacity of the water reservoirs is enhanced, the hydropower facility could provide most of the peak load requirements obviating the need to build large peak-load gas generators.     

A hybrid model for the optimum integration of renewable technologies in power generation systems

The main purpose of this work is to assess the unavoidable increase in the cost of electricity of a generation system by the integration of the necessary renewable energy sources for power generation (RES-E) technologies in order for the European Union Member States to achieve their national RES energy target. The optimization model developed uses a genetic algorithm (GA) technique for the calculation of both the additional cost of electricity due to the penetration of RES-E technologies as well as the required RES-E levy in the electricity bills in order to fund this RES-E penetration. Also, the procedure enables the estimation of the optimum feed-in-tariff to be offered to future RES-E systems. Also, the overall cost increase in the electricity sector for the promotion of RES-E technologies, for the period 2010–2020, is analyzed taking into account factors, such as, the fuel avoidance cost, the carbon dioxide emissions avoidance cost, the conventional power system increased operation cost, etc. The overall results indicate that in the case of RES-E investments with internal rate of return (IRR) of 10% the cost of integration is higher, compared to RES-E investments with no profit, (i.e., IRR at 0%) by 0.3–0.5 €c/kWh (in real prices), depending on the RES-E penetration level.     

Large-scale integration of wind power into the existing Chinese energy system

This paper presents the ability of the existing Chinese energy system to integrate wind power and explores how the Chinese energy system needs to prepare itself in order to integrate more fluctuating renewable energy in the future. With this purpose in mind, a model of the Chinese energy system has been constructed by using EnergyPLAN based on the year 2007, which has then been used for investigating three issues. Firstly, the accuracy of the model itself has been examined and then the maximum feasible wind power penetration in the existing energy system has been identified. Finally, barriers have been discussed and suggestions proposed for the Chinese energy system to integrate large-scale renewable energy in the future. It is concluded that the model constructed by the use of EnergyPLAN can accurately simulate the Chinese energy system. Based on current regulations to secure grid stability, the maximum feasible wind power penetration in the existing Chinese energy system is approximately 26% from both technical and economic points of view. A fuel efficiency decrease occurred when increasing wind power penetration in the system, due to its rigid power supply structure and the task of securing grid stability, was left primarily to large coal-fired power plants. There are at least three possible solutions for the Chinese energy system to integrate large-scale fluctuating renewable energy in the long term: Redesigning the regulations to secure grid stability by means of diversifying the participants, such as including hydropower and CHP plants; integrating large-scale heat pumps combined with heat storage devices to satisfy district heat demands and developing electric vehicles to promote off peak electricity utilisation.     

Breaking down the silos: the integration of energy efficiency, renewable energy, demand response and climate change

This paper explores the feasibility of integrating energy efficiency program evaluation with the emerging need for the evaluation of programs from different “energy cultures” (demand response, renewable energy, and climate change). The paper reviews key features and information needs of the energy cultures and critically reviews the opportunities and challenges associated with integrating these with energy efficiency program evaluation. There is a need to integrate the different policy arenas where energy efficiency, demand response, and climate change programs are developed, and there are positive signs that this integration is starting to occur.

Large scale wind power integration in China: Analysis from a policy perspective

Between 2006 and 2010 the installed capacity of wind power in China has doubled and by 2010 China's cumulative installed capacity of wind power ranked the first in the world, surpassing the United States. However, the rapid expansion of installed capacity has not been matched by grid connection, and this deficiency has aroused the concern of both policy makers and scholars. Unlike most of the current studies which focus on technical strategies in China's wind power industry, this paper analyzes the problem from a policy perspective. The paper analyzes the four challenges that large scale wind power integration in China faces: the uncoordinated development between wind power capacity and power grids; the lack of suitable technical codes for wind power integration; the unclear nature of the grid companies’ responsibility for grid connection; and the inadequate economic incentives for grid enterprises. To address these problems, the paper recommends that the government: formulates policies to better coordinate the development of wind power and the planning and construction of power grids; establishes grid codes that reflect in particular the requirements to be met by users of power transmission and distribution networks; and integrates administrative intervention and economic incentive policies to stimulate the grid enterprises’ enthusiasm to absorb wind power generation.     

Wood pellets production costs and energy consumption under different framework conditions in Northeast Argentina

The development of cleaner and renewable energy sources are needed in order to reduce dependency and global warming. Wood pellets are a clean renewable fuel and has been considered as one of the substitutes for fossil fuels. In Argentina, large quantities of sawmill residues are still unused and wood pellets production could be seen as both, as an environmental solution and an extra economical benefit. The general aim of this study was to determine the wood pellets production costs and energy consumption under different framework conditions in northeast Argentina. The specific costs of wood pellets for the different scenarios showed relative lower costs comparing to the ones reported in other studies, ranging from 35 to 47 €/Mg_pellets. Raw material costs represented the main cost factor in the calculation of the total pellets production costs. A lower specific production cost was observed when 50% of the raw material input was wood shavings. The specific electricity consumption per metric ton of pellet was lower in scenarios with higher production rate. Lower heat energy consumption was observed in scenarios that have a mixed raw material input. The most promising framework condition for Northeast Argentina, in terms of costs effectiveness and energy consumption could be acquired with production rates of 6 Mg/h with sawdust and wood shavings as raw material. However, simultaneous increment of the electricity by 50% and raw material price by 100% may increase the specific costs up to 50%.     

Risk adjusted financial costs of photovoltaics

Recent research shows significant differences in the levelised photovoltaics (PV) electricity cost calculations. The present paper points out that no unique or absolute cost figure can be justified, the correct solution is to use a range of cost figures that is determined in a dynamic power portfolio interaction within the financial scheme, support mechanism and industry cost reduction. The paper draws attention to the increasing role of financial investors in the PV segment of the renewable energy market and the importance they attribute to the risks of all options in the power generation portfolio. Based on these trends, a former version of a financing model is adapted to project the energy mix changes in the EU electricity market due to investors behaviour with different risk tolerance/aversion. The dynamic process of translating these risks into the return expectation in the financial appraisal and investment decision making is also introduced. By doing so, the paper sets up a potential electricity market trend with the associated risk perception and classification. The necessary risk mitigation tasks for all stakeholders in the PV market are summarised which aims to avoid the burden of excessive risk premiums in this market segment.     

Updated hydrogen production costs and parities for conventional and renewable technologies

This paper provides first a review of the production costs of hydrogen from conventional, nuclear and renewable sources, reported in the literature during the last eight years. In order to analyze the costs on a unified basis, they are updated to a common year (2009), taking into account the yearly inflation rates. The study also considers whether the hydrogen has been produced in centralized or distributed facilities. From these data, the expected future costs for conventional production of hydrogen are calculated considering several scenarios on carbon emission taxations. Based on these estimations, together with the predicted future costs (2019–2020 and 2030) for hydrogen from alternative sources, several hydrogen cost-parity analyses are exposed for renewable and nuclear energies. From the comparison between these alternative technologies for hydrogen production and the conventional ones (steam methane reforming and coal gasification), several predictions on the time-periods to reach cost parities are elaborated.     

Sustainable power planning for the island of Crete

Crete, as one of the largest and most touristic islands of the Mediterranean, is facing abrupt population and economic growth tendencies that result in the incessant problem of inability to meet power demand increase. This paper evaluates the island's present electrical energy status, and examines the possibility of further penetration of sustainable energy.     

Understanding the variability of wind power costs

Wind power has a significant contribution to make in efforts to abate CO₂ emissions from global energy systems. Currently, wind power generation costs are approaching parity with costs attributed to conventional, carbon-based sources of energy but the economic advantage still rests decidedly with conventional sources. Therefore, there is an imperative to ensure that wind power projects are developed in the most economically optimal fashion. For wind power project developers, shaving a few tenths of a cent off of the kilowatts per hour cost of wind power can mean the difference between a commercially viable project and a non-starter. For civic authorities who are responsible for managing municipally supported wind power projects, optimizing the economics of such projects can attenuate stakeholder opposition. This paper attempts to contribute to a better understanding of how to economically optimise wind power projects by conflating research from the fields of energy economics, wind power engineering, aerodynamics, geography and climate science to identify critical factors that influence the economic optimization of wind power projects.     

An investigation on wind power potential of Nurda ı-Gaziantep, Turkey

Turkey is one of the developing countries. The production of electricity in Turkey is basically focused on hydro-power and thermal-power. On the other hand, measurements show that Turkey has a reasonable wind potential but this potential was not being used for many years due to government policies which supported the use of petroleum, coal, and hydro power as energy sources. In recent years there is an increasing interest in using wind energy as one of the energy sources. This paper briefly introduces a study of the determination of wind power potential of Nurda ı/Gaziantep district where is on the south of Turkey for future wind power generation projects. Evaluation of wind data; taken by Turkish Electrical Power Resources Development Administration at the foot of the mountain, Nurda ı, shows that the district has a mean wind speed of 7.3 m/s at 10 m height and observed highest value wind speed is 23.3 m/s. Mean power density of the site is found as 222 W/m² and the results suggest that the site encourages investors especially since the terrain is a grassy plain on the side of the mountain and the measurements are taken at 10 m height.     

An energy management approach for renewable energy integration with power generation and water desalination

The share of the renewable energy sources (RES) in the global electricity market is substantially increasing as a result of the commitment of many countries to increase the contribution of the RES to their energy mix. However, the integration of RES in the electricity grid increases the complexity of the grid management due to the variability and the intermittent nature of these energy sources. Energy storage solutions such as batteries offer either short-term storage that is not sufficient or longer period storage that is significantly expensive. This paper introduces an energy management approach which can be applied in the case of power and desalinated water generation. The approach is based on mathematical optimization model which accounts for random variations in demands and energy supply. The approach allows using desalination plants as a deferrable load to mitigate for the variability of the renewable energy supply and water and/or electricity demands. A mathematical linear programming model is developed to show the applicability of this idea and its effectiveness in reducing the impact of the uncertainty in the environment. The model is solved for the real world case of Saudi Arabia. The optimal solution accounts for random variations in the renewable energy supply and water and/or electricity demands while minimizing the total costs for generating water and power.     

Efficiency and effectiveness of promotion systems for electricity generation from renewable energy sources - Lessons from EU countries

Currently, a wide range of strategies is implemented in different countries to increase the share of electricity from renewable energy sources (RES-E). A still controversial discussion is whether quantity-driven (like Tradable Green Certificates (TGCs) based on quotas) or price-driven (like feed-in-tariffs (FIT)) instruments lead to preferable solutions for society. The core objective of this paper is to compare the perspectives of quota-based certificate trading systems for an efficient and effective increase of RES-E with FIT. The major results of this analysis are: (i) The success stories of growth in RES-E in EU member states in recent years has been triggered by FIT implemented in a technology-specific manner at modest costs for European citizens; (ii) At present, TGC systems in most countries applied show a low effectiveness with respect to RES-E deployment of less mature technologies such as solar PV (with improving tendencies in e.g. the UK or Italy with respect to certain technologies); (iii) Compared to short term trading in TGC markets the intrinsic stability of FIT systems appears to be a key element for success; (iv) Hence, currently a well-designed (dynamic) FIT system provides a certain deployment of RES-E in the shortest time and at lowest costs for society.     

Renewable energy: Externality costs as market barriers

This paper addresses the impact of environmentally based market failure constraints on the adoption of renewable energy technologies through the quantification in financial terms of the externalities of electric power generation, for a range of alternative commercial and almost-commercial technologies. It is shown that estimates of damage costs resulting from combustion of fossil fuels, if internalised into the price of the resulting output of electricity, could lead to a number of renewable technologies being financially competitive with generation from coal plants. However, combined cycle natural gas technology would have a significant financial advantage over both coal and renewables under current technology options and market conditions. On the basis of cost projections made under the assumption of mature technologies and the existence of economies of scale, renewable technologies would possess a significant social cost advantage if the externalities of power production were to be “internalised”. Incorporating environmental externalities explicitly into the electricity tariff today would serve to hasten this transition process.     

Integration of optimal combinations of renewable energy sources into the energy supply of Wang-An Island

This is a case study of Wang-An Island's energy demands and potential renewable energy sources (RESs). Optimal integration of RESs was simulated using the EnergyPLAN model. The RES evaluation indicated an annual production potential of 458.1 GWh, which substantially surpassed local energy requirements of 22.3 GWh. The potential of yearly electricity generation from RESs of 299.7 GWh apparently outnumbers local electricity demand of 6.4 GWh as well, indicating that 100% renewable electricity would be achievable if surplus electricity can be stored and then reused during an electricity deficit. Electricity production from fully exploited RESs is able to supply only 5.8 GWh of electricity mainly caused by mismatches in times of electricity demand and production. The integrated optimization can supply 3.7 GWh of electricity. A deficit of 2.68 GWh can be compensated for through electricity storage or biomass energy. Although the total amount of generated renewable electricity during the whole year cannot yet satisfy the total amount of yearly demand, electricity storage can help to satisfy most of the electricity needs for the year.     

Valuing the attributes of renewable energy investments

Increasing the proportion of power derived from renewable energy sources is becoming an increasingly important part of many countries's strategies to achieve reductions in greenhouse gas emissions. However, renewable energy investments can often have external costs and benefits, which need to be taken into account if socially optimal investments are to be made. This paper attempts to estimate the magnitude of these external costs and benefits for the case of renewable technologies in Scotland, a country which has set particularly ambitious targets for expanding renewable energy. The external effects we consider are those on landscape quality, wildlife and air quality. We also consider the welfare implications of different investment strategies for employment and electricity prices. The methodology used to do this is the choice experiment technique. Renewable technologies considered include hydro, on-shore and off-shore wind power and biomass. Welfare changes for different combinations of impacts associated with different investment strategies are estimated. We also test for differences in preferences towards these impacts between urban and rural communities, and between high- and low-income households.     

Increasing biomass based power generation in the UK

As the UK strives to increase its level of renewables based power generation, the contribution that biomass makes and could make in the future is examined. The role of power generation from biomass in reducing greenhouse gas emissions is evaluated, alongside an evaluation of the wider environmental, social and economic impacts of increasing the level of bioenergy in the UK. Progress with implementation of biomass projects is compared to UK national targets and the policy support framework is critically examined, with recommendations regarding future support mechanisms.