Profile Costs as a Component of Integration Costs in Wind Energy

By Tyler McNeal. University of Minnesota-Twin Cities.

Recent discussion in literature has focused on levelized costs of energy (LCOE) and using these costs as a benchmark in evaluating the effectiveness of one energy source when compared to another. The desirability of using these numbers has been called into question by a number of researchers when it comes to variable renewable energy sources because there are additional costs that dispatchable energy sources dont have that arent included in LCOE numbers. The associated costs that are not calculated in LCOE numbers can be listed as follows: transmission addition costs, integration costs, base-load power cycling costs, environmental costs, and the cost of additional policy that supports wind power. The focus of this particular study was profile costs as a component of the integration costs and how they affect the overall cost of wind and its economic desirability. A mathematical method was devised to obtain monthly locational marginal prices of wind energy from 2012 and 2013 which was then compared to contracted power purchase agreement prices for the same energy over the same time frame. An ANOVA statistical analysis was used to analyze the difference between the data to determine if the price difference was statistically different. p-values from the ANOVA were 0.0001 for both 2012 and 2013 showing high statistical significance in the difference of means in the data. Total losses were subsequently calculated for the utility company to be $14,626,863 in 2012 and $12,735,001 in 2013.

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