FULL REPORT Next Generation Wind and Solar Power From cost to value FULL REPORT Next Generation Wind and Solar Power From cost to value INTERNATIONAL ENERGY AGENCY The International Energy Agency (IEA), an autonomous agency, was established in November 1974. Its primary mandate was – and is – two-fold: to promote energy security amongst its member countries through collective response to physical disruptions in oil supply, and provide authoritative research and analysis on ways to ensure reliable, affordable and clean energy for its 29 member countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among its member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports. The Agency’s aims include the following objectives: Secure member countries’ access to reliable and ample supplies of all forms of energy; in particular, through maintaining effective emergency response capabilities in case of oil supply disruptions. Promote sustainable energy policies that spur economic growth and environmental protection in a global context – particularly in terms of reducing greenhouse-gas emissions that contribute to climate change. Improve transparency of international markets through collection and analysis of energy data. Support global collaboration on energy technology to secure future energy supplies and mitigate their environmental impact, including through improved energy efficiency and development and deployment of low-carbon technologies. Find solutions to global energy challenges through engagement and dialogue with non-member countries, industry, international organisations and other stakeholders. IEA member countries: Australia Austria Belgium Canada Czech Republic Denmark Estonia Finland France Germany Greece Secure Sustainable Hungary Together Ireland Italy Japan Korea Luxembourg Netherlands New Zealand Norway Poland Portugal Slovak Republic © OECD/IEA, 2016 Spain International Energy Agency Sweden 9 rue de la Fédération 75739 Paris Cedex 15, France Switzerland Turkey www.iea.org United Kingdom Please note that this publication United States is subject to specific estrictions that limit its use and distribution. The European Commission The terms and conditions are also participates in available online at www.iea.org/t&c/ the work of the IEA. © OECD/IEA 2016 Next-Generation Wind and Wolar Power From cost to value Acknowledgements This publication was prepared by the System Integration of Renewables (SIR) Unit of the International Energy Agency (IEA). Simon Mueller, Head of the SIR Unit, is the main author of this report; it was developed under the supervision of Paolo Frankl, Head of the Renewable Energy Division and Keisuke Sadamori, Director of Energy Markets Security. Emanuele Bianco, Karl Page | 3 Hauptmeier, Yanqiu Bi, Thomas Guibentif, Timon Dubbeling and Cédric Philibert of the IEA Renewable Energy Division contributed to analysis and drafting of the document. Laszlo Varro, IEA Chief Economist, and Rebecca Gaghen, Head of the Communication and Information Office, provided valuable guidance. The authors are grateful for the comments received by Henrik Breum, Anders Brix Thomsen, Kim Møller Porst, Steffen Nielsen, Anne Thyssen, Nethe Veje Laursen (Danish Energy Agency), Jake Badger (DTU Wind Energy), Julian Barquin (Endesa and Comillas Pontifical University), Tobias Bischof-Niemz, Jarrad Wright (Council of Scientific and Industrial Research, South Africa), Rebecca Collyer (European Climate Foundation), Eric Delteil (Total New Energies), Emily Farnworth (The Climate Group), Carlos Gascó Travesedo, Marta Martínez Sánchez (Iberdrola), Gilberto Hollauer (Ministry of Mines and Energy, Brazil), Maritje Hutapea Ministry of Energy and Mineral Resources, Indonesia), Mariano Morazzo (ENEL Foundation), Josche Muth, Nicole Taeumel (GIZ), Steve Sawyer (Global Wind Energy Council), Katrin Schaber (Stadtwerke Munich), Fernando de Sisternes (Argonne National Laboratory), Stefan Ulreich (E.ON SE) and Efraín Villanueva Arcos (Secretariat of Energy, Mexico). Justin French-Brooks and Therese Walsh were the primary editors of this report. Thanks go to the IEA Communication and Information Office for their editorial and production guidance and to Bertrand Sadin for graphic design. This study contributes to the work of the Multilateral Solar and Wind Working Group as part of the Clean Energy Ministerial. The work has been supported by a voluntary contribution by the Danish Ministry of Energy, Utilities and Climate. Comments and questions on this report are welcome and should be addressed to Simon Mueller ([email protected]) or the SIR unit ([email protected]). © OECD/IEA 2016 Next-Generation Wind and Wolar Power From cost to value Table of contents Executive summary ............................................................................................................... 10 Chapter 1: Background, introduction and the case for Variable Renewable Energy (VRE) ......... 15 Page | 5 The case for VRE .......................................................................................................................... 15 Cost reductions ........................................................................................................................ 16 Energy security ........................................................................................................................ 16 Economic development ........................................................................................................... 17 Climate change mitigation and other environmental benefits ............................................... 17 Chapter 2: Next-generation wind and solar power and system integration .............................. 19 System integration....................................................................................................................... 20 Properties of VRE generators .................................................................................................. 20 Power system flexibility ........................................................................................................... 21 Different phases of system transformation ................................................................................ 22 Initial deployment of VRE ........................................................................................................ 22 Reaching double-digit shares in annual generation .................................................................. 24 From integration to transformation ........................................................................................ 25 A paradigm shift for low- and medium-voltage grids .................................................................. 27 System value, or the need to go beyond costs ............................................................................ 29 Chapter 3: Achieving system-friendly VRE deployment ........................................................... 34 System service capabilities .......................................................................................................... 34 Location of deployment ............................................................................................................... 35 Technology mix ............................................................................................................................ 36 Local integration with other resources ....................................................................................... 37 Optimising generation time profile ............................................................................................. 38 Focus on onshore wind ............................................................................................................ 39 Focus on solar PV ..................................................................................................................... 42 Integrated planning .................................................................................................................... 48 Summary: Reflecting SV in RE policy frameworks ....................................................................... 48 Chapter 4: Conclusions and recommendations ....................................................................... 53 References ................................................................................................................................... 55 Chapter 5: Case studies .......................................................................................................... 58 Introduction to scope and methodology ..................................................................................... 58 Brazil ............................................................................................................................................ 61 General information on VRE and grid integration ................................................................... 61 Market and policy frameworks ................................................................................................ 67 Next-Generation Wind and Wolar Power © OECD/IEA 2016 From cost to value System transformation ............................................................................................................ 71 Discussion ................................................................................................................................ 74 References ..............................................................................................................................