PNNL

Abstract

In this paper we introduce a simple cost model of renewable integration and demand response that can be used to determine the optimal mix of generation and demand response resources. The model includes production cost, demand elasticity, uncertainty costs, capacity expansion costs, retirement and mothballing costs, and wind variability impacts to determine the hourly cost and revenue of electricity delivery. The model is tested on the 2024 planning case for British Columbia and we find that cost is minimized with about 31% renewable generation. We also find that demand responsive does not have a significant impact on cost at the hourly level. The results suggest that the optimal level of renewable resource is not sensitive to a carbon tax or demand elasticity, but it is highly sensitive to the renewable resource installation cost.