COS 44-7 - Economics of ambient energy variability: A system approach

Wednesday, August 14, 2019: 10:10 AM
M105/106, Kentucky International Convention Center
David S. Timmons, Economics, University of Massachusetts Boston, Boston, MA
Background/Question/Methods

Key sources of renewable energy, including solar, wind, and water power, are derived from natural flows of ambient energy. As such, these energy sources are inherently variable. This variability is perhaps the greatest economic challenge for expanding renewable energy use. Approaches to energy-source variability include using energy storage and backing up variable sources with dispatchable ones; both approaches incur costs.

In this study we consider hypothetical energy systems for the isolated electricity grid of Mauritius. To better illustrate the interactions of variable and dispatchable renewable sources, we model only solar photovoltaic energy, biomass energy, and energy storage in the form of pumped hydropower. We first demonstrate that since both energy storage and biomass have increasing marginal costs, and use of one resource affects costs of the other, a system model must be used to minimize total costs.

We next present a system model of solar and biomass energy in Mauritius. The constrained optimization model allows for different combinations of solar and biomass energy along with energy storage. The model objective is to identify the combination of solar, biomass, and energy storage that minimizes cost, subject to constraints on required energy required and source availability.

Results/Conclusions

The model demonstrates that solar energy along with either energy storage or nighttime biomass energy production could feasibly provide all electricity on Mauritius, however, given their marginal cost structures, the minimum-cost system utilizes both storage and biomass options.

We also discuss (though we do not model) the potential effects of ecosystem service values on optimal solutions. For example, per-hectare biomass production from sugar cane greatly exceeds biomass available from native forests. Yet forests provide a range of ecosystem services not provided by sugar-cane fields, and sugar cane cultivation may contribute to loss of services in ecosystems such as coral reefs.

Our study demonstrates that fully renewable energy systems are feasible in locations relying on variable ambient energy, but that minimizing energy cost requires system modeling including location-specific ambient variability and costs. While the particular results of this study are unique to Mauritius, results derive from the marginal cost structures of the technologies, and we thus expect that parallel results will be found for renewable energy systems utilizing ambient energy in other locations.