A Tale of Two Renewables
July 24th, 2018 7:15 pm | by John MacCormack Ph.D. P.Eng. | Posted in Uncategorized
A quick view of PSTI’s website at https://psti.ca/agt-dashboard reveals an astonishing fact. From July 14 to 21, of all technology types, solar generation has realized nearly the highest prices for the energy it produced while wind generation has achieved the lowest. The difference between the prices realized by the two technologies is stark. Over this week the solar generation realized an average price of just over $100/MWh while wind generation realized less than $40/MWh!
Another astonishing difference was the difference in the capacity factor of solar and wind generation. In general the average output in relation to the installed capacity of both solar generation and wind generation is low. However, the PSTI website shows the average wind output over this week has been 326 MW whereas the average solar output has been 5 MW. Since there is 1445 MW of installed wind and 15 MW of installed Solar capacity this translates into a capacity factor of 22% for wind and 33% for solar!
For both solar and wind generation, fuel costs are essentially zero meaning the fixed costs of these generators dominate and revenues per MW of installed capacity are of particular interest. If we were to only look at the last week, the revenues per MW of installed capacity would be roughly 3.75 times as high for solar generation (100 * 0.33)/(40 * 0.22) compared to wind generation.
It turns out it was a stellar week for solar generation and a rather disappointing week for wind generation. We know from experience that the annual capacity factor for wind generation is approximately 35% while forecasts for solar the annual capacity factors are estimated to be 18% to 19%.
The capacity factor of solar generation over the last week can be explained by the long summer days. Predictably this will drop off considerably during the winter.
Wind generation does not have such easily forecast regularities and is more uncertain. The AESO’s wind forecast[1], even 12 hours out, often shows a difference of 800 MW between the maximum and minimum expected wind output.
The high realized prices for solar over are in part driven by price spikes that occurred during the hot daylight hours when demand was highest and wind generation was very low.
Price spikes do not occur equally throughout the year. We know from experience that price spikes occur more frequently in the summer months than during winter months even though winter loads are higher than summer loads.[2] The reason is that both supply and demand drive prices. Supplies are generally lowest in the summer when generators are off line for planned maintenance.
The large scale integration of wind generation has also had an impact on prices. When it is windy the significant increase in energy supply lowers price. As the AESO has shown wind generation receives average prices that are now significantly below average pool prices over the year. [3]
Solar generation (at the transmission level) is currently limited to one 15 MW plant at Brooks. While future large scale adoption of solar may impact pricing it currently has only a small impact on supplies.
It appears that solar generation will provide more predictable energy outputs and at least for the near future may be expected to realize a higher average revenue per MWh of energy produced than wind generation. The last week shows how big the difference can become.
Perhaps this explains in part the surge in interest in solar generation projects listed in the AESO’s Long Term Adequacy report.[4]
[1] https://www.aeso.ca/grid/forecasting/wind-power-forecasting
[2] Pool Price report at http://ets.aeso.ca/
[3] https://www.aeso.ca/market/market-and-system-reporting/annual-market-statistic-reports/
[4] https://www.aeso.ca/market/market-and-system-reporting/long-term-adequacy-metrics/
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