Working Paper: Utility-scale Wind Power: Impacts of Increased Penetration

Lawrence Pitt, G. Cornelis van Kooten, Murray Love and Ned Djilali for Resource and Environmental economics and Policy Analysis Research Group|June 1, 2005
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This working paper is made available by the Resource and Environmental economics and Policy Analysis (REPA) Research Group at the University of Victoria. REPA working papers have not been peer reviewed and contain preliminary research findings. They shall not be cited without the expressed written consent of the author(s).

Editor's Note: The authors’ conclusion regarding ‘effective capacity’, i.e. the measure of a generator’s contribution to system reliability that is tied to meeting peak loads, is that it “is difficult to generalize, as it is a highly site-specific quantity determined by the correlation between wind resource and load” and that ‘values range from 26 % to 0% of rated capacity.” This conclusion is based, in part, on a 2003 study by the California Energy Commission that estimated that three wind farm aggregates- Altamont, San Gorgonio and Tehachpi, which collectively represent 75% of California’s deployed wind capacity- had relative capacity credits of 26.0%, 23.9% and 22.0% respectively. It is noteworthy that during California’s Summer ’06 energy crunch, as has been widely publicized in the press, wind power produced at 254.6 MW (10.2% of wind’s rated capacity of 2,500MW) at the time of peak demand (on July 24th) and over the preceding seven days (July 17-23) produced at 89.4 to 113.0 MW, averaging only 99.1 MW at the time of peak demand or just 4% of rated capacity.

Selected Extracts


Intermittent renewable energy sources such as wind, solar, run-of-river hydro, tidal streams and wave fluxes present interesting challenges when exploited in the production of electricity, which is then integrated into existing and future grids. We focus on wind energy systems because they have an emerging presence, with new installed capacity approaching 8 GW annually. We survey many studies and compile estimates of regulation, load following and unit commitment impacts on utility generating assets with increasing wind penetration. Reliability (system reserve), observed capacity factors and the effective capacity (ability to displace existing generation assets) of wind energy systems are discussed. A simple energy balance model and some results from utility-scale simulations illustrate the existence of a law of diminishing returns with respect to increasing wind penetration when measured by wind’s effective capacity, fuel displacement or CO2 abatement. A role for energy storage is clearly identified. Finally, the scale of wind energy systems is shown to be large for significant energy production and preliminary evidence is reviewed showing that extraction of energy from the atmospheric boundary layer by such systems, when penetration levels are significant, may have potential environmental impacts.


With upwards of 8 GW of nameplate wind turbine capacity being installed annually world wide, this form of electricity production deserves careful scrutiny. This paper presents results from a review of potential impacts introduced when wind generation becomes part of the generating portfolio of large utility systems. Power generation from wind has economic impacts for utilities due to the intermittent nature and spatial distribution of the wind resource (DeCarolis and Keith 2004). Furthermore, integration of significant percentages of fluctuating
wind power into existing and future utility grid systems present unique challenges for the remaining generation mix to balance electricity supply and demand and to maintain reliability.

Prior to actual utility experience or serious attempts to model real utility-scale penetration of wind power, much speculation existed about the potential impacts of wind power. A perception exists that the variability and uncontrollability of wind make it unsuitable for widespread use as a large scale generating technology or that it would require MW for MW backup if it were used. On the other hand, perception is also widespread that wind power can be readily incorporated into existing grid systems with penetration levels of up to 20% or more without additional measures (Irish WEA 2000, EWEA 2003). Both perceptions turn out to be incorrect, as the results of recent work and experience will show.

First we examine two distinct metrics for wind energy systems – effective capacity (or capacity credit) and capacity factor. Then we discuss some of the systemic impacts of wind energy systems, especially those seen from the point of view of the conventional, non-wind generating plant. The role wind power can play in reducing CO2 from power generation is also examined. We end with some mention of climate/meteorological impacts of wind power.


Presently there are no isolated systems with multi-TWh demand that have wind penetration levels above a few percent. Thus operational impacts experienced to date are likely to be small. Due to the expanding deployment of wind power motivated by CO2 mitigation desires, it is an opportune time to conduct a rigorous assessment of this form of power production. We believe this assessment has only just begun.

A review of available literature along with some additional results presented here leads us to conclude that:

1) The ancillary costs for wind are non-zero for small wind penetrations and escalate for increasing penetration ratios, although the amounts are not onerous but they are not insignificant either.

2) The effective capacity credit for wind is difficult to generalize, as it is a highly site-specific quantity determined by the correlation between wind resource and load. Values range from 26 % to 0% of rated capacity.

3) Observed capacity factors for existing, predominantly on-shore wind plants are in the range of 20% – 25 % rather than the optimistic range of 30% - 35%. This suggests that more capital investment will be required to achieve production targets from wind power.

4) A distinctive feature of wind power is the signature of diminishing returns with increasing wind penetration, whether from the viewpoint of capacity displacement (amount of conventional plant retired by wind), CO2 displacement as a result of fuel displacement by wind, or estimates of payments to wind farms.

5) A serious effort to estimate the costs of integrating wind into a predominantly gas fired thermal system suggest the true costs are very high, mainly due to impacts on the thermal plant fuel consumption and the fact that there are fewer MWhs for the non-wind plant to recover costs.

6) The resulting CO2 mitigation costs are also high.

7) Large-scale wind farms may have discernable effects on local weather patterns and possibly climate behavior. We should not be too surprised that large-scale resource extraction would have impacts on natural systems as our experience with industrial scale forestry, fisheries and energy attest.

We feel these conclusions are, at best, a preliminary assessment of the impacts of wind power. Much more work is required to test their robustness. However, due to the incentive from policy tools such as Renewable Portfolio Standards and direct subsidies favouring wind power development, we consider that research into all facets of wind power’s impact to be of high importance.


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March 13, 2013

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