IEA (2016), Next Generation Wind and Solar Power, IEA, Paris https://www.iea.org/reports/next-generation-wind-and-solar-power
Renewable power has seen a dramatic expansion in recent years thanks to sharply falling costs. But this growth has raised a new challenge for power-system operators and regulators. Integrating the first few percentage points of variable renewables into generation poses few problems for most power systems. Beyond these levels however, power systems must be adapted and upgraded to take variable renewables into account. The new report includes a series of country-specific case studies that show how emerging countries can achieve integration. These possible solutions include long-term strategic planning, upgrades to power systems, more advanced variable renewable technology, additional distributed resources and policies that encourage projects with greater system value. This measurement of system value is particularly important. The traditional focus on the levelised cost of electricity – a measure of cost for a particular generating technology at the level of a power plant – is no longer sufficient. Next-generation approaches need to factor in the system value of electricity from wind and solar power – the overall benefit arising from the addition of a wind or solar power generation source to the power system. System value is determined by a variety of factors, including reduced fuel costs, reduced CO2 and other pollutant emissions costs, or higher costs of additional grid infrastructure. When this real system value of variable renewables is measured, and policies are put in place to maximize the benefit from this value, then the next generation of wind and solar can begin to truly live up to its potential.