Operating Cost Recovery

At higher wind penetrations, thermal generators are generally required to change their operating practices. This includes (i) maintaining higher reserve

Break-even price for a supercritical coal unit in China as a function of operating hours

Figure 13.2. Break-even price for a supercritical coal unit in China as a function of operating hours.

Note: This example assumes a capacity cost of 530 yuan/kW-year and an energy cost of 0.36 yuan/kWh. Source: Authors’ calculation based on E3 (2015).

levels, or operating further below rated capacity, to account for the higher uncertainty in wind availability; (ii) more frequent, faster, and deeper changes in output (‘ramps’) to respond to changes in wind availability; and (iii) more frequent start-ups and shutdowns to respond to the uncertainty and variability in wind output. These kinds of changes in operating practices increase operating costs for coal and other dispatchable generators. Collectively, these additional costs tend to be very small as a portion of system costs, but more palpable as a share of generator profits. In many countries, they are recovered either on a regulated cost basis or through energy and ancillary services markets. In China, however, thermal generators are still not directly compensated for a significant portion of their additional cost of accommodating wind generation.

 
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