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Determining the Capacity Value of Wind: An Updated Survey of Methods and Implementation

2008

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Electric systems must have sufficient reserves so that resources are adequate to meet customer demand. Because electricity demand cannot be known in advance with certainty, and because generation can experience mechanical or electrical failures which take it out of service (i.e., experience forced outages), a planning reserve that consists of installed capacity in excess of load requirements is necessary to maintain reliability. This reserve is applied in the planning time frame (i.e., one year or more), and is a determination of system adequacy: is there sufficient installed generation to meet load obligations? Capacity requirements are currently implemented differently from region to region, but a new Resource Adequacy Assessment standard is under development by the North American Electric Reliability Corporation (NERC) which would establish consistent requirements for NERC regions to assess adequacy. As wind achieves greater penetration in the United States, it will become important to address the issue of how wind contributes to system adequacy. Wind’s contribution to adequacy is its capacity value. The level of wind capacity value is a matter of debate in some regions, due to the variability of wind power and its relationship with load. Utilities and other entities typically allocate some capacity value to wind power, although at a lower level than other energy technologies. All of the nation’s regional transmission organizations (RTOs) assign a capacity value to wind, and some states, as well as studies in Colorado and Minnesota, have also determined that wind energy has a capacity value. This paper examines the various methods used to estimate the capacity value of wind and is an update of a paper we presented at WINDPOWER 2005. This paper summarizes several important state and regional studies that examine the capacity value of wind energy, how different regions define and implement capacity reserve requirements across the country, and how wind energy is defined as a capacity resource in those regions. Updates on changes to the capacity value of wind in ERCOT, ISO New England, PJM, California, and New York will be provided. We also provide an overview of wind capacity value in Europe. [Abstract]

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