DocumentCode :
648225
Title :
Economic valuation of wind curtailment rights
Author :
Yu, N.P. ; Sheng, H.Y. ; Johnson, R.
Author_Institution :
Southern California Edison, Rosemead, CA, USA
fYear :
2013
fDate :
21-25 July 2013
Firstpage :
1
Lastpage :
5
Abstract :
The proportion of wind capacity in the generation portfolio continues to expand with increasing renewable penetration in the United States. The combination of more frequent negative real-time locational marginal prices and over-generation from wind farms has started to reduce wind farm owners´ operating profit in Independent System Operator (ISO) managed electricity markets. Therefore, it is vital for utilities/independent power producer to start negotiating (or renegotiating) wind energy procurement contracts with developers to include some type of curtailment rights. The contract negotiations call for the development of a comprehensive methodology to conduct economic valuation on curtailment rights. This paper addresses the needs by proposing a new method for evaluating wind farm curtailment rights. The valuation methodology not only considers the financial aspect but also closely models the physical dispatch of wind farms. The valuation method is applied to a generic wind farm in the California ISO (CAISO) system. The simulation results demonstrate that curtailment rights have a significant value to wind farm owners if the resource is bid appropriately into the wholesale power market.
Keywords :
investment; power generation dispatch; power generation economics; power markets; pricing; wind power plants; CAISO system; California ISO system; United States; electricity markets; generation portfolio; independent power producer; independent system operator; negative real-time locational marginal prices; renewable penetration; wholesale power market; wind capacity proportion; wind curtailment right economic valuation; wind energy procurement contracts; wind farm dispatch; wind farm owner operating profit; Autoregressive processes; Biological system modeling; Cost accounting; Economics; Predictive models; Wind; Wind farms; Contract Valuation; Markov Regime Switching; Wholesale Power Market; Wind Curtailment;
fLanguage :
English
Publisher :
ieee
Conference_Titel :
Power and Energy Society General Meeting (PES), 2013 IEEE
Conference_Location :
Vancouver, BC
ISSN :
1944-9925
Type :
conf
DOI :
10.1109/PESMG.2013.6672796
Filename :
6672796
Link To Document :
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