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Title: Use of Solar and Wind as a Physical Hedge against Price Variability within a Generation Portfolio

This study provides a framework to explore the potential use and incremental value of small- to large-scale penetration of solar and wind technologies as a physical hedge against the risk and uncertainty of electricity cost on multi-year to multi-decade timescales. Earlier studies characterizing the impacts of adding renewable energy (RE) to portfolios of electricity generators often used a levelized cost of energy or simplified net cash flow approach. In this study, we expand on previous work by demonstrating the use of an 8760 hourly production cost model (PLEXOS) to analyze the incremental impact of solar and wind penetration under a wide range of penetration scenarios for a region in the Western U.S. We do not attempt to 'optimize' the portfolio in any of these cases. Rather we consider different RE penetration scenarios, that might for example result from the implementation of a Renewable Portfolio Standard (RPS) to explore the dynamics, risk mitigation characteristics and incremental value that RE might add to the system. We also compare the use of RE to alternative mechanisms, such as the use of financial or physical supply contracts to mitigate risk and uncertainty, including consideration of their effectiveness and availability over a variety of timeframes.
Authors:
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Publication Date:
OSTI Identifier:
1090959
Report Number(s):
NREL/TP-6A20-59065
DOE Contract Number:
AC36-08GO28308
Resource Type:
Technical Report
Research Org:
National Renewable Energy Laboratory (NREL), Golden, CO.
Sponsoring Org:
USDOE Office of Energy Efficiency and Renewable Energy Solar Energy Technologies Program
Country of Publication:
United States
Language:
English
Subject:
14 SOLAR ENERGY; 17 WIND ENERGY; 24 POWER TRANSMISSION AND DISTRIBUTION; 32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION RENEWABLE ENERGY PENETRATION; RISK AND UNCERTAINTY; NATURAL GAS PRICES; PRODUCTION COST MODEL; Energy Analysis; Solar Energy - General; Wind Energy