Impacts of variation management on cost-optimal investments in wind power and solar photovoltaics

Journal article, 2020

This work investigates the impacts of variation management on the cost-optimal electricity system compositions in four regions with different pre-requisites for wind and solar generation. Five variation management strategies, involving electric boilers, batteries, hydrogen storage, low-cost biomass, and demand-side management, are integrated into a regional investment model that is designed to account for variability. The variation management strategies are considered one at a time as well as combined in four different system contexts. By investigating how the variation management strategies interact with each other as well as with different electricity generation technologies in a large number of cases, this work support policy-makers in identifying variation management portfolios relevant to their context. It is found that electric boilers, demand-side management and hydrogen storage increase the cost-optimal variable renewable electricity (VRE) investments if the VRE share is sufficiently large to reduce its marginal system value. However, low-cost biomass and hydrogen storage, are found to increase cost-optimal investments in wind power in systems with a low initial wind power share. In systems with low solar PV share, variation management reduce the cost-optimal solar PV investments. In two of the regions investigated, a combination of variation management strategies results in a stronger increase in VRE capacity than the sum of the single variation management efforts.