Integration of Variable Generation and Cost-Causation (Fact Sheet)

Variable renewable energy generation sources, such as wind and solar energy, provide benefits such as reduced environmental impact, zero fuel consumption, and low and stable costs. Advances in both technologies can reduce capital costs and provide significant control capabilities. However, their variability and uncertainty - which change with weather conditions, time of day, and season - cancause an increase in power system operating costs compared to a fully controllable power plant. Although a number of studies have assessed integration costs, calculating them correctly is challenging because it is difficult to accurately develop a baseline scenario without variable generation that properly accounts for the energy value. It is also difficult to appropriately allocate costs giventhe complex, nonlinear interactions between resources and loads.