Wind and Gas, Back-up or Back-out, "That is the Question

The focus of this study is to explore the effect that the deployment of a large share of wind energy has on the Northwest European power generation mix in the current market circumstances. Natural gas is often mentioned as a suitable partner for wind. This paper tries to substantiate and quantify the current and potential relationship between gas and wind in Northwest European electric power supply in the context of the transition towards a low-carbon energy economy.
The effect of wind power is analysed from the perspective that reducing CO2 emissions is the principal driver behind installing wind energy. The study aims to give general insight in what would happen to the power mix if more wind energy were to be introduced, what the contribution to CO2 emissions reduction would be, and the potential role of natural gas and other fuels in handling long periods (> 4 hours) of low wind supply.
The main conclusions of the paper are:

• Wind power has a low capacity credit (in NW Europe). This means that wind power does not significantly replace other generating capacity; alternative power sources need to be in place, together with new installed wind capacity for at least 80% of installed wind capacity, to ensure that there is sufficient back-up to meet market demand at times of reduced wind power supply. Most of this will have to come from conventional power plants. If hydro capacity from Norway is available, this back-up capacity could be reduced to approximately 70%.
• Wind capacity will thus essentially be "surplus" to the necessary dispatchable system capacity, and thus costs of wind capacity will essentially come on top of the costs of the base conventional capacity. The extra costs of wind capacity can be reduced or compensated by the abated fuel and carbon costs from conventional generation.
• The effectiveness of wind power to reduce CO2 emissions is directly related to the level of CO­2 prices. In today's energy market with low CO2 prices, new installed wind power tends primarily to replace gas-fired power, resulting in limited CO2 reduction, and thus becomes an expensive and less effective way of reducing CO2 emissions.
• Sufficiently high CO2 prices would reverse the position of gas and coal in the merit order (irrespective of wind), reducing CO2 emissions by around 10-25 %. Other or complementary ways to achieve CO2 emission reduction (for example, the use of an Emission Performance Standard) were not analysed in this paper.
• With higher CO2 prices, wind would replace coal-fired power, further reducing CO2 emissions and significantly improving the effectiveness and costs of wind in reducing CO2 emissions.
• In a conceptual design for a future low-carbon energy system in which wind plays a prominent role in reducing CO2 emissions, gas-fired power is the most suitable and economic partner, as long as other renewable options remain unproven, technically limited and/or uneconomical.
• A high CO2 price would be a tool for forcing additional low carbon measures, such as CCS. With CCS, gas fired generation remains more competitive than coal with CCS and offers an attractive and competitive low CO2 option, in its own right, as well as in combination with wind.
• An additional question which arises is whether the present market model for organising and dispatching electricity is appropriate and effective in an environment with a significant share of wind power. In this context there are implications of large-scale partnering with wind power for the performance and economic viability of gas-fired power plants (with or without CCS) as well as for the gas supply. These will need to be further examined to ensure that the gas and power industries are ready to become secure partners.

http://www.clingendael.nl/publications/2011/20111200_ciep_study_wind_gas.pdf