Capacity Credit

An additional issue in the context of economic appraisals of intermittent renewable sources is the capacity credit of the source. This topic was discussed extensively in Chapter 3 and it is revisited here in the context of its economic implications. As mentioned previously, the capacity credit of any power plant may be defined as a measure of the ability of the plant to contribute to the peak demands of a power system. Numerous utility studies have concluded that wind can displace thermal plant.

The capacity credit of wind in northern Europe is roughly equal to the capacity factor in the winter quarter [ 17] . Results from ten European studies are compared in Figure 7.11. showing credits declining from 20-40% to 10-20% with low and 15% wind penetration respectively. It should be noted that the values of capacity credit depend on the capacity factor of the wind plant.

The UK National Grid Company has estimated that 8000 MW of wind might displace about 3000 MW of conventional plant and 25 000MW of wind (20% penetration) would displace about 5000 MW of such plant. Figure 7.12 compares values of capacity credit normalized for annual capacity factor (as different values were used in the three studies) and shows a good measure of agreement. 'CEGB' refers to a study before privatization, 'NGC' a later study after privatization and 'SCAR' is referred to in Reference [18]. With modest contributions of

Capacity credit/rated power 0.4

2 4 6 8 10 12 14 16 Energy penetration, %

Figure 7.11 Comparison of results from ten utility studies of capacity credit, though assumptions differ. (Courtesy of David Milborrow)

Capacity credit/annual capacity factor 1.6

Wind energy contribution, %

Figure 7.12 Normalized values of capacity credit from three studies of the NGC system. (Courtesy of David Milborrow)

wind energy the capacity credits are about 40% greater than the annual capacity factor and therefore, if the average capacity factor across the country was 35%, then 1000 MW of wind would displace 490MW of thermal plant. At higher wind energy penetrations the capacity credit declines due to the requirement for more part-2oaded generation plant to cover for uncertainties in wind power generation.

No evidence appears to exist to demonstrate that the conclusions set out above are inaccurate. Although there are periods of calm during the summer, the loss of load probability at such times is low. The nonavailability of wind during such periods therefore makes little difference to the year-round probability. It may be noted that the capacity credit of solar plant

Capacity credit/rated power 0.4

2 4 6 8 10 12 14 16 Energy penetration, %

Figure 7.11 Comparison of results from ten utility studies of capacity credit, though assumptions differ. (Courtesy of David Milborrow)

Wind energy contribution, %

Figure 7.12 Normalized values of capacity credit from three studies of the NGC system. (Courtesy of David Milborrow)

in the UK would be very low and that of tidal barrage plant would be lower than the average capacity factor.

Once the capacity credit has been determined, the value of capacity can then be estimated. The alternative new generation technology is mostly combined cycle gas turbines, costing around €700/kW, and the annual capital replacement cost of such plant is about €70/kW, although this depends on the annual cost of capital. At low wind energy penetrations the value associated with the capacity credit is around 0.8 € cents/kW h.

Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

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