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Grid Constraints on Renewable Energy | The Energy Collective

If renewable energy is ever to become truly subsidy independent and earn its keep in electricity markets, that means there is a natural stopping point at which a marginal increment of wind or solar will become unprofitable. The market revenues earned by these VREs will eventually fall far enough that it's no longer worth deploying more.

This is also why the idea of reaching "grid parity," or a levelized cost equal to the prevailing market price, is pretty meaningless. As soon as wind or solar penetration grows, the goal posts move further away due to this merit-order or market price effect. Wind and solar costs will have to keep falling to secure greater penetration levels and remain profitable at the ever lower and lower market prices caused by increasing VRE penetration.

Alternatively, if wind and solar are to remain subsidized, the amount of public subsidy per unit of energy supplied will have to keep growing in order to push VRE shares higher and higher. The total subsidy cost could rise sharply, as the price per MWh required increases alongside the quantity of electricity generated from these sources. 


Indeed, according to a major new study of the challenges of integrating wind and solar in the Western Interconnection of North America, the maximum production of variable renewables at any instant can't exceed about 55-60 percent of total demand without risking system stability.

In Ireland, which, as we saw in part 1 is the world leader in variable renewable penetration, system operators currently limit variable renewable production to 50 percent of demand at any given time, although operators are working to increase this limit.

In short, the capacity factor threshold may actually be generous: if the instantaneous penetration of wind and solar can't exceed half or two-thirds of power system demand in any given moment, system security concerns will begin to bind before the penetration of variable renewables reaches their capacity factor.

by Bjinse on Thu Jun 4th, 2015 at 04:11:44 PM EST

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