How do you accurately assess and effectively manage the costs of integrating the new kind of variability from renewables like wind and solar into transmission systems that are habituated to the more familiar standards of fossil and nuclear generation?
The California Public Utilities Commission (CPUC) is considering a new formula for such a cost assessment. In his April 5 Rulemaking, Commissioner Mark Ferron described a “least cost, best fit” formula for capturing the full range of costs and benefits of renewables selected to meet the state’s 33 percent renewables by 2020 renewable portfolio standard (RPS).
In it, the Net Market Value (R) of a generation source is defined as:
Energy Value (E) + Capacity Value (C) – Post-Time-of-Delivery Adjusted Power Purchase Agreement Price (P) + Transmission Network Upgrade Costs (T) + Congestion Costs (G) + Integration Costs (I)
For an Adjusted Net Market Value (A), the CPUC would sum that Net Market Value (R) and Ancillary Services Value (S).
This is complicated stuff and researchers have not yet defined all of those factors. But it is a more effective way, explained BrightSource Energy Vice President for Government Affairs and Communications Joe Desmond, of evaluating the value a generation source is delivering into the system. “There is a lot of work being done in this area — studies by NREL, studies by Lawrence Berkeley National Lab, studies by the Cal ISO — and they’re all converging on the need to look at the full cost of operating a system when we choose and compare among different resources.”