IEA says wind and solar can carry bulk of energy transformation

[GliderGuider]

29. An excerpt from the Executive Summary:

Integrating large shares of VRE cost-effectively calls for a system-wide transformation

The classic view sees VRE integration as adding wind and PV generation without considering all available options for system adaptation. This ‘traditional’ view may miss the point. Integration effects are determined by both VRE and other system components. Consequently, they can be reduced by interventions on either side. In short, integration of VRE is not simply about adding VRE to “business as usual,” but transforming the system as a whole.

The cost of reaching high shares of VRE differs from system to system. Most importantly, costs depend on how well different components of the system fit together. Minimising total system costs at high shares of VRE requires a strategic approach to adapting and transforming the energy system as a whole.

Supposing that high shares of VRE are added overnight significantly increases total system costs. Using a test system, an extreme and purely hypothetical case was investigated. A share of 45% VRE in annual generation was added to the system overnight and only the operation of the remaining system was allowed to change (Legacy case, see Box ES.1). In this case, total system costs increase by as much as USD 33 per megawatt hour (/MWh) or about 40% (rising from USD 86/MWh to USD 119/MWh, Figure ES.1). This increase is the result of three principal drivers:

• additional cost of VRE deployment itself (which in this modelling exercise is assumed to remain similar to today’s levels)
  
• additional grid costs associated with connecting distant VRE generation and grid reinforcements
  
• limited avoided costs in the residual system, because VRE can only bring operational savings in the form of fuel and emission cost reductions in the Legacy scenario.

The additional costs of more flexible operation of existing power plants (more frequent start/stop, more dynamic changes in output) are not an important element in the increased costs.

A co-ordinated transformation of the entire system reduces additional costs. A different scenario of the test system considers a more transformative approach. The installed power plant mix is reoptimised in the presence of 45% VRE and additional flexibility options are deployed (Transformed case). Compared to the Legacy case, the power plant mix shows a structural shift:

• a strong decrease in the number of power plants that are designed to operate around the clock and that cannot change their output dynamically (referred to as baseload technologies)
  
• an increase in the number of flexible power plants that are designed for part-time operation (referred to as mid-merit and peaking generation).

In addition, a better strategy for managing grid infrastructure is assumed. In this case, total system
costs increase only by USD 11/MWh. This is two-thirds less than in the Legacy scenario. At a share of
30% of VRE in power generation, the increase in total system costs stands at USD 6/MWh.