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Energies 2018, 11(3), 549; https://doi.org/10.3390/en11030549

Optimal Integration of Intermittent Renewables: A System LCOE Stochastic Approach

1,†
and
2,†,*
1
School of Science and Technologies, University of Camerino, via M. delle Carceri 9, 62032 Camerino (MC), Italy
2
Department of Economics, University of Chieti-Pescara, viale Pindaro 42, 65127 Pescara (PE), Italy
These authors contributed equally to this work.
*
Author to whom correspondence should be addressed.
Received: 7 February 2018 / Revised: 25 February 2018 / Accepted: 1 March 2018 / Published: 4 March 2018
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Abstract

We propose a system level approach to value the impact on costs of the integration of intermittent renewable generation in a power system, based on expected breakeven cost and breakeven cost risk. To do this, we carefully reconsider the definition of Levelized Cost of Electricity (LCOE) when extended to non-dispatchable generation, by examining extra costs and gains originated by the costly management of random power injections. We are thus lead to define a ‘system LCOE’ as a system dependent LCOE that takes properly into account intermittent generation. In order to include breakeven cost risk we further extend this deterministic approach to a stochastic setting, by introducing a ‘stochastic system LCOE’. This extension allows us to discuss the optimal integration of intermittent renewables from a broad, system level point of view. This paper thus aims to provide power producers and policy makers with a new methodological scheme, still based on the LCOE but which updates this valuation technique to current energy system configurations characterized by a large share of non-dispatchable production. Quantifying and optimizing the impact of intermittent renewables integration on power system costs, risk and CO 2 emissions, the proposed methodology can be used as powerful tool of analysis for assessing environmental and energy policies. View Full-Text
Keywords: intermittent source integration; power system; cost risk; levelized cost of electricity; generation portfolio frontier intermittent source integration; power system; cost risk; levelized cost of electricity; generation portfolio frontier
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Lucheroni, C.; Mari, C. Optimal Integration of Intermittent Renewables: A System LCOE Stochastic Approach. Energies 2018, 11, 549.

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