How Sensitive are Optimal Fully Renewable Power Systems to Technology Cost Uncertainty?

52 Pages Posted: 4 May 2020 Last revised: 6 Jan 2021

See all articles by Behrang Shirizadeh

Behrang Shirizadeh

CIRED, International Research Center on Environment & Development, France; Deloitte FA, Economic Advisory

Quentin Perrier

CIRED, International Research Center on Environment & Development, France

Philippe Quirion

CIRED, International Research Center on Environment & Development, France; CNRS/EHESS

Date Written: May 4, 2020

Abstract

Many studies have demonstrated the feasibility of fully renewable power systems. Yet the future costs of key technologies are highly uncertain and little is known about the robustness of a renewable power system to these uncertainties. To analyze it, we build 315 cost scenarios by varying the costs of key technologies and we model the optimal renewable power system for France, simultaneously optimizing investment and dispatch. We add to the literature by studying a consecutive 18-years weather period; by testing all combinations of technology costs rather than changing them one-at-a-time; and by calculating the regret from optimizing the energy mix on the basis of cost assumptions that do not materialize.
Our results indicate that the cost of a 100% system is not that sensitive to uncertainty. Admittedly, the optimal energy mix is highly sensitive to cost assumptions: across our scenarios, the installed capacity in PV, onshore wind and power-to-gas varies by a factor of 5, batteries and offshore wind even more. However, in every scenario the total production and storage cost is similar to, or lower than the current cost. This indicates that renewable technologies will become by and large substitutable. Moreover, even if the energy mix is optimized based on cost assumptions which turn out to be wrong, the extra cost is low: 4% in average and less than 9% in 95% of the scenarios.

Keywords: Power system modelling; Variable renewables; Electricity storage; Robust decision making.

Suggested Citation

Shirizadeh, Behrang and Perrier, Quentin and Quirion, Philippe, How Sensitive are Optimal Fully Renewable Power Systems to Technology Cost Uncertainty? (May 4, 2020). USAEE Working Paper No. 20-441, Available at SSRN: https://ssrn.com/abstract=3592447 or http://dx.doi.org/10.2139/ssrn.3592447

Behrang Shirizadeh (Contact Author)

CIRED, International Research Center on Environment & Development, France ( email )

Campus du Jardin Tropical
45 bis avenue de la Belle Gabrielle
F94736 Nogent sur Marne Cedex
France

Deloitte FA, Economic Advisory ( email )

Tour Majunga, 6 Place de la Pyramide
Paris-la-Défense, Paris-la-Défense Cedex 92908
France

Quentin Perrier

CIRED, International Research Center on Environment & Development, France ( email )

Campus du Jardin Tropical
45 bis avenue de la Belle Gabrielle
F94736 Nogent sur Marne Cedex
France

Philippe Quirion

CIRED, International Research Center on Environment & Development, France ( email )

Campus du Jardin Tropical
45 bis avenue de la Belle Gabrielle
F94736 Nogent sur Marne Cedex
France
+33 1 43 94 73 95 (Phone)
+33 1 43 94 73 70 (Fax)

CNRS/EHESS

54, boulevard Raspail
Paris, 75006
France

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