Is the concept of ‘grid parity’ defined appropriately to evaluate the cost-competitiveness of renewable energy technologies?

Is the concept of ‘grid parity’ defined appropriately to evaluate the cost-competitiveness of... The concept of ‘grid parity’ has emerged as a key indicator of the competitiveness of renewable electricity generation technologies. In this study, we firstly summarize the definition of the current levelized cost of electricity (LCOE) based methodology for the concept and address its limitation in not taking into account the systematic changes in an electric power system. Secondly, we introduce a bottom-up energy system model based methodology to overcome the limitation. Lastly, we apply the methodology to a case study, the grid parity analysis of solar photovoltaic and onshore wind technologies in the Korean electric power system, to highlight the differences between the results obtained using both methodologies. The results of the study show three implications. First, even if the LCOE of onshore wind is already lower than that of natural gas technologies and the average price of grid electricity, the LCOE is required to be much lower to achieve cost-competitiveness in the electric power system. Second, different technologies might be required to have different LCOE levels to be cost-competitive in the same power system. Third, a policy or plan for the deployment of renewable energy technologies must be harmonized with other policies and plans within the same system. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Energy Policy Elsevier

Is the concept of ‘grid parity’ defined appropriately to evaluate the cost-competitiveness of renewable energy technologies?

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Publisher
Elsevier
Copyright
Copyright © 2015 Elsevier Ltd
ISSN
0301-4215
D.O.I.
10.1016/j.enpol.2015.08.021
Publisher site
See Article on Publisher Site

Abstract

The concept of ‘grid parity’ has emerged as a key indicator of the competitiveness of renewable electricity generation technologies. In this study, we firstly summarize the definition of the current levelized cost of electricity (LCOE) based methodology for the concept and address its limitation in not taking into account the systematic changes in an electric power system. Secondly, we introduce a bottom-up energy system model based methodology to overcome the limitation. Lastly, we apply the methodology to a case study, the grid parity analysis of solar photovoltaic and onshore wind technologies in the Korean electric power system, to highlight the differences between the results obtained using both methodologies. The results of the study show three implications. First, even if the LCOE of onshore wind is already lower than that of natural gas technologies and the average price of grid electricity, the LCOE is required to be much lower to achieve cost-competitiveness in the electric power system. Second, different technologies might be required to have different LCOE levels to be cost-competitive in the same power system. Third, a policy or plan for the deployment of renewable energy technologies must be harmonized with other policies and plans within the same system.

Journal

Energy PolicyElsevier

Published: Nov 1, 2015

References

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