Bases Teóricas de las Estrategias Cognitivas

Another issue which needs to be discussed for the analysis of the impact of renewable elec-tricity generation on the elecelec-tricity sector is the impact on the existing generation companies and their facilities.

11 Own calculations based on (Deutsche Energie-Agentur [DENA], 2005, p.143)

6.3.1

Operation of conventional power plants

An issue which has already been hinted at in the previous section is the fact that the fluctuat-ing renewable electricity generation can increase operation of existfluctuat-ing power plants in partial load mode. The operation of power plants in partial load mode (below their net capacity) re-duces the efficiency and leads to higher generation cost and CO2 emissions. This phenomenon occurs mainly due to the fact that the existing power plant portfolio is not optimized for the operation with increasing renewable electricity generation. Estimations of the cost connected with the increased operation in partial load are scarce. One estimation can be found in the literature. The authors state additional cost of 0.4 to 0.9 Euro per MWh electricity generation by wind energy (Auer et al., 2005, p.143). Since the assumed fuel prices in the given study are 40 % below the level of the fuel prices in the year 2006, these figures have to be adjusted.

Since fuel prices account for most of the cost connected with the operation in partial load mode, the estimated cost of the given study is multiplied by factor 1.4. This procedure leads to estimated cost of 1.26 Euro/MWh electricity generation by wind energy for the year 2006.

If this value is multiplied by the electricity generation by wind energy of the year 2006, the cost of the adjusted operation of the conventional power plant portfolio can be estimated to 38 million Euro.

6.3.2

Lost profits

Another issue which has to be taken into account is the issue of reduced profits for the genera-tion companies. The replacement of the convengenera-tional electricity generagenera-tion by renewable elec-tricity generation and the reduced market prices caused by the merit-order effect discussed in Chapter 6.1.2 should lead to reduced profits in a liberalized electricity market. In the given case profit is defined as market price in a given hour minus variable cost. Additional costs which have to be covered by the generators are the start up costs of power plants, fixed opera-tion and maintenance costs and the capital cost of power plants. In order to assess the impact of renewable electricity generation on the profit of generation companies owning conven-tional power plants the PowerACE Cluster System is utilized. Again 50 simulation runs with and without supported renewable electricity generation are analysed for the year 2006 with the same settings applied for the analysis of the merit-order effect and the CO2 price effect.

The overall profit is calculated according to Formula 6-10.

Formula 6-10: Calculation of the aggregated profit of generation companies m = Spot market price for electricity [Euro/MWh]

o = Variable operation and maintenance cost [Euro/MWh]

x = Fuel price [Euro/MWh]

z = CO2 price [Euro/t]

ε = Profit [Euro]

η = Efficiency [%]

ζ = CO2 price integration factor [None]

The results of the calculation show that the overall profit of the generation companies is re-duced by ca 5.3 billion Euro. Although this is considerable, it is worthy to note that the vol-ume of the lost profits is ca. 1.1 million Euro lower than the sum of the merit-order effect and the CO2 price effect of the year 2006. This can be explained by the fact that fuel cost and the opportunity cost for CO2 are reduced due to the lower CO2 prices and the lower utilization of power plants.

6.3.3

Impact on investments in the electricity sector

The issue of the impact of renewable electricity generation on investments in the electricity sector deals with a long-term perspective. One aspect which is also part of the current discus-sion is the aspect of avoided investments in additional conventional power plants. Most of the capacity of hydro power plants, bio fuel fired plants and a small portion of the installed capac-ity of wind energy can be considered as secure capaccapac-ity which does not need a back-up of conventional plants. In case of scarce capacity this capacity helps to avoid investments in ad-ditional capacity. The crucial issue for the further analysis is the determination of the secure capacity. One model based analysis in the literature states avoided conventional capacity of 1.5 GW for wind energy in the year 2007 (Deutsche Energie-Agentur [DENA], 2005, p.295).

In order to determine the possible capacity effect of the entire supported renewable electricity generation the data set of the PowerACE Cluster System is analysed. Basically there are two ways to determine the avoided conventional capacity. The first method is the analysis of the time series of renewable electricity generation by setting an availability requirement, which means that the capacity has to be available at least for a certain percentage of the time of a year. If the availability requirement of 98 % is applied to the simulated renewable electricity generation of the year 2006, a secure capacity of 1840 MW can be calculated. Another method is to determine the reduction of the peak demand of conventional capacity. Therefore the time series of load that has to be covered by conventional power plants is analysed with and without the supported renewable electricity generation. In this case the avoided demand for conventional capacity reaches ca. 5 GW for the year 2006.

The next step is the analysis of the monetary value of avoided capacity demand for conven-tional generation capacity in the year 2006. Therefore it is necessary to determine what kind

of investments in generation capacity has been avoided up to 2006. If gas turbines as the cheapest technology in terms of investment are applied, the avoided investment amounts to 1.3 billion Euro¹² for 5 GW of avoided capacity. If the gas fired combined cycle plants are applied as avoided reference plant, the value almost doubles¹³. However, since the PowerACE simulation for the year 2006 without the supported renewable electricity genera-tion shows no system outages due to shortage of capacity, it could be stated that no invest-ments in conventional generation capacity have been replaced so far. However, a comparison of system load and available generation capacity in the given simulation run shows that this situation might change in the near future, especially if some of the older plants are decommis-sioned within the next years. As the analysis of the impact of renewable electricity generation on the electricity sector carried out in this chapter focuses on the year 2006, the value of the avoided investments in conventional generation capacity is set to zero.

In addition to the discussed aspects it is also likely that the increasing renewable electricity generation also has an impact on future investment decisions and the preferred plant type as the utilization of conventional plants is likely to decrease. However, this aspect goes beyond the scope of this thesis and cannot be analysed in more detail in this context.