The long-term implications of renewable energy to the power generation landscape

May 3, 2019

11.2% of capacity in 2020 will be intermittent wind and solar power and this will have a low capacity factor and an even lower capacity credit. This means that it cannot replace base load fossil fuel or nuclear capacity on a one for one basis in terms of megawatts and a larger amount of renewable capacity will have to be built while at the same time retaining conventional powered plants for back up. This has several effects.

In the 2011 IEA report on the cost of generating electricity by different technologies, a base load factor of 84% was used for gas, coal and nuclear plants. Country-specific load factors were applied for renewables because they are largely site-specific but the medians were 24% for wind and 14% for solar. Capacity credits are complex to calculate and are wholly country-specific and can only be calculated by utilities with access to operational data. There is recent evidence that capacity factors for solar are higher in sunny locations because the maximum output coincides with peak demand, e.g. mid-day and air conditioning in California, but for the purposes of this commentary we are using the IEA figures. Capacity credits are lower than load factors because they take account of loss of load probability (LOLP), which is the unpredictable variability that can be so difficult to manage for balancing the system. Capacity credits are the amount of conventional capacity which can be taken out of the system while still preserving its security. We forecast around 799 GW of wind and solar capacity by 2020 and with a capacity credit of 15% this would mean it can substitute for 120 GW of fossil fuel or nuclear power. This means construction of around 670 GW of additional intermittent generating capacity which would not be needed if all capacity was to remain fossil fuel or nuclear.

Given that the future capacity mix is still planned to provide the same amount of electricity this will result in a lower overall utilisation factor for plant. Utilisation wavered around 4.1 to 4.2 through the 1990s and up to about 2007, when it started to decline, falling from 4.2 in 2007 to 4.1 in 2008. It will continue to decline, reaching 3.7 by 2018.

Learn more about this topic through the NRG Expert Power Generator Database

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