Environmental Engineering Reference
In-Depth Information
in the UK would be very low and that of tidal barrage plant would be lower than the average
capacity factor.
Once the capacity credit has been determined, the value of capacity can then be estimated.
The alternative new generation technology is mostly combined cycle gas turbines, costing
around
70/kW,
although this depends on the annual cost of capital. At low wind energy penetrations the value
associated with the capacity credit is around 0.8
700/kW, and the annual capital replacement cost of such plant is about
€
€
cents/kW h.
€
7.5.5 Summary
In the UK, the government has set a target of achieving 20% renewable energy in electricity
supply by 2020. This provides a basis for estimating the total additional cost to the electricity
consumer, taking into account all the above factors. An analysis completed in 2003 suggested
that the extra cost would represent an additional 0.3 p/kW h (0.45
cents/kW h) on consumer
electricity bills [19]. As wind energy is expected to contribute the majority of the renewable
energy target, the analysis assumed that all the renewable energy would come from wind and
made projections about future trends in wind energy costs. Similar analyses have been made
for the state of Pennsylvania and for the Republic of Ireland [20], with broadly similar con-
clusions. The Irish study suggested that electricity consumers might realize savings from
about 2010 onwards when the additional costs associated with extra balancing were out-
weighed by the lower costs of wind compared to gas. In all these studies, however, it is
essential to examine the assumptions carefully.
€
7.6 Support Mechanisms for Renewable Energy
7.6.1 Introduction
The previous section assessed the value of renewable energy generation when competing
directly with other 'conventional' power generation sources in an open electricity market.
Many countries have recognized that renewable energy would fi nd it diffi cult to compete on
level terms due to the issues of:
•
Variability. As discussed, most renewable energy sources cannot easily be controlled and
their output forecast with 100% accuracy.
•
Cost. Many of the renewable energy technologies are not yet mature and thus cost more
than conventional generation at present.
•
External costs. The external costs of conventional generation (pollution, CO
2
emissions,
etc.) are not yet properly accounted for and the fl ip-side of this is that renewable energy
generation is not properly credited for avoiding these external costs.
The basic ways that governments have dealt with this in order to promote the uptake of
renewable energy are:
