This article provides an overview of many of the costs people fail to associate with adding industrial wind turbines to a supply mix.
Former regulator says more wind not a “silver bullet” | RenewablesBiz:
While lower off-peak prices may contribute to a reduction in the annual average price of power, other costs may go up. For example, if the wind generation is a ‘must-take’ for the grid operator, then the operator is forced to redispatch other types of generation out of economic merit order to compensate for the additional wind on their systems, Elliott said.Continue reading the entire article at RenewablesBiz:
While redispatch may lower the cost of energy, it may also increase costs in at least three areas: increased operation and maintenance (O&M) costs due to cycling baseload coal plants, increased revenue uplift if generators are taken out of merit order, and increased costs for ancillary services to manage wind’s generation characteristics.
For example, if a baseload coal plant is backed down to accommodate wind, “You’re increasing O&M costs, you’re shortening the life of the equipment by cycling it – turbines are designed to run 24/7/365 at a high load factor – plus you’re probably increasing carbon output per kilowatt-hour,” Elliott said.
When redispatch to accommodate wind results in taking generation out of merit order, it can create additional challenges – and costs – through revenue “uplift.”
“Merit order” means committing the lowest-cost generation first, followed by the next lowest, and so on. When wind displaces generation that was previously committed, the economic merit order is disrupted, and those generators that were previously committed have to be compensated for that displacement.
That compensation takes place through a mechanism called a “revenue sufficiency guarantee,” a provision that ensures generators that are committed for reliability reasons by the grid operator will receive sufficient funds to cover their costs, even if they are not ultimately called upon to generate at the level to which they were committed.