The value of diversifying uncertain renewable generation through the transmission system
Van Horn, Kai
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A study published by the ISE estimates transmission-related benefits attributable to the geographic diversification of variable renewable generation and loads. The analysis indicates that the benefits of transmission expansion between areas with diverse renewable generation resources are greater than typically estimated, with significant reductions in system-wide costs and renewable generation curtailments in both hourly day-ahead and intra-hour power market operations. The benefits are substantial and yet often not accounted for because they are more difficult to model. The key findings of the study include the following: 1. For renewable generation levels from 10% to 60% of annual energy consumption, interconnecting two power market sub-regions with different wind regimes through transmission investments can reduce annual production costs by between 2% and 23% and annual renewable curtailments by 45% to 90%. 2. When real-time uncertainties of renewable generation and loads relative to their day-ahead forecasts are taken into consideration, the benefit of geographic diversification through the transmission grid are 2 to 20 times higher than benefits typically quantified based only on “perfect forecasts.” The findings of the study highlight the important role transmission expansion can play in successfully integrating large-scale renewable generation under both forecasted day-ahead and real-time market conditions. The authors also emphasize the need for transmission benefit-cost analyses to go beyond deterministic hourly simulations and begin taking into account both forecasting uncertainty and intra-hour system conditions to fully capture the regional and inter-regional renewable generation diversification benefits of the transmission system.