Valuing the flexibility of alternative sources of power generation

Chapman, Chris and Ward, Stephen (1996) Valuing the flexibility of alternative sources of power generation. Energy Policy, 24 (2), 129-136. (doi:10.1016/0301-4215(95)00078-X).

Record type: Article

Abstract

Solar and other renewable technologies can provide increments to an existing energy system which are small in capacity with a short lead time. Such power generation units provide more flexibility in incremental provision than large, long lead time units such as nuclear power stations. However, small, short lead time units are not normally given explicit credit for the flexibility these attributes provide. This additional flexibility can be valued by assessing the costs arising from the relative inflexibility of large, long lead time units. Numerical examples illustrate the proposed approach and the scale of the values involved. Failure to consider such values provides a built-in bias against the selection of sources of energy available as units with a small capacity, short lead time, and other flexibility attributes, including mobility and modularity. The approach outlined in this paper can eliminate this bias in a manner which is transparent and open to effective sensitivity analysis.

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