UC Berkeley

The focus of this dissertation is the economic implications of the technical challenges of integrating variable generation, namely wind and solar, into the electric power system. The research is organized around three topics: short-term variability of wind and solar generation, changes in the economic value of wind and solar with increasing penetration, and the effectiveness of different measures at mitigating changes in economic value with increasing penetration levels. Early studies of PV grid impacts suggested that short-term variability could be a potential limiting factor in deploying PV. Many of these early studies, however, lacked high-quality data from multiple sites to assess the costs and impacts of increasing PV penetration. As is well known for wind, this research demonstrates that accounting for the potential for geographic diversity can significantly reduce the magnitude of extreme changes in aggregated PV output, the resources required to accommodate that variability, and the potential costs of managing variability. Still, the economic value of wind and PV is found to drop as the penetration increases in a case study of California that uses a long-run investment model with significant detail on the operational constraints in the power system. The drop is primarily due to a drop in the capacity value (particularly for solar) and energy value. Day-ahead forecast error and ancillary service costs, although not insignificant, do not change as dramatically with increasing penetration. The same model and data is then used to evaluate several options to stem the decline in value of these technologies. The largest increase in the value of wind at high penetration levels comes from increased geographic diversity. The largest increase in the value of PV at high penetration levels comes from assuming that low-cost bulk power storage is an investment option. Other attractive options, particularly at more modest penetration levels, include real-time pricing and technology diversity.