One of the biggest drawbacks investors and utilities have found with renewable energy sources like wind and solar power is that they are “variable.” Simply put: they can’t generate electricity when the sun’s not shining or the wind isn’t blowing.
In the past, utilities believed that they had to compensate for this variability by installing more traditional, fossil-fueled power plants. The more wind or solar on the grid, the thinking went, the greater the need for reliable backup generating facilities.
Recently, however, researchers have started to question this notion. Simulations and models have shown that connecting geographically dispersed wind and solar sites can greatly decrease the variability of the whole system and reduce the need for backup power plants.
The latest studies on the topic out of Rocky Mountain Institute contends that utility managers need to think about their renewable energy investments as a portfolio.
“No person would invest in just one stock,” says Lena Hansen, one of the studies’ authors and a senior consultant with RMI’s Energy & Resources Team. In the financial markets, people forego the huge risks and potentially large gains of owning shares of one company for the reduced risk and smaller rates of return of owning shares in multiple companies.
Hansen argues that the same should go for utilities investing in variable energy sources like wind and solar. “By diversifying the portfolio of sites, you mitigate variability,” she says.
The trick is to balance risks and rewards. Sites that tend to generate wind at different hours of the day can offset each other’s periods of low production or inactivity. Similarly, solar installations could be sited at different longitudes so that collectively they are catching sun over a greater number of hours each day.
The real payoff, though, is combining wind and solar resources into one portfolio. In their first simulation of 43 sites throughout the upper Midwest, Hansen and her colleagues found that an optimal combination of solar and wind sites could reduce variability in the whole system by 55 percent. Surprisingly, those results bore out whether they looked at all 43 sites together or as few as six optimally selected ones.
In a follow-up study being presented at WindPower 2008, Hansen and her colleagues enlarged their simulation outside the upper Midwest to include all the Great Plains states. They also looked at a longer time series (three years instead of one) for the upper Midwest study area.
They found that the study area decreases the variability of a wind and solar portfolio even more than in the original simulation. The results also seem to hold true even for a longer time series.
Both findings further validate the value of a diverse portfolio of renewables and give credence to an old adage: the whole is greater than the sum of its parts.
Read the results from the first simulation here.
