IEA Assesses Cost-Effectiveness of Variable Renewable Energy

IEA26 February 2014: The International Energy Agency (IEA) has published a book exploring how power systems with high shares of variable renewable energy (VRE), such as wind and solar, can remain reliable and cost-effective. Its key finding is that a high share of renewables can be affordable  in any country context.  

The book, titled 'The Power of Transformation - Wind, Sun and the Economics of Flexible Power Systems,' summarizes the results of the IEA's Grid Integration of VRE (GIVAR) project, and is based on seven case studies from over 15 countries. It concludes that in any country, well-designed systems with high percentages of VRE (over 30%) can come at little additional economic cost in the long term, and with much lower social and environmental costs.

The book presents an analytical framework for determining the economics of VRE integration, underscores the importance of taking a system-wide approach to integrating high percentages of VRE into energy systems, and makes recommendations on how to make a transition to high shares of VRE cost-effective. It features chapters on: system impacts of VRE deployment; technical flexibility assessment of case study regions; costs and benefits- the value of variable renewable energy; system-friendly VRE deployment; operational measures for VRE integration; flexibility investment options; and system transformation and market design.

Its main findings include that: opportunities and challenges of integration are determined by VRE interaction with other system components; system-wide transformation is required to integrate large shares of VRE cost-effectively (the components of which the book describes); and a variety of system-flexibility options are needed to reach high shares of VRE. Conclusions and recommendations include that: countries deploying VRE should recognize and implement established best practices and make better use of existing system flexibility; countries with stable power systems should maximize existing flexibility within their systems; and countries with dynamic power systems must strategically and holistically plan for the most appropriate VRE mix to arrive at a sustainable energy system.

The book is based on the following case studies: Brazil; Electric Reliability Council of Texas (Texas, US); Iberia (Portugal and Spain); India; Italy; Japan East (Hokkaido, Tohoku and Tokyo) and North; and Western Europe (Denmark, Finland, France, Germany, Ireland, Norway, Sweden and the UK). [IEA Press Release] [Executive Summary] [Publication: The Power of Transformation - Wind, Sun and the Economics of Flexible Power Systems]