2 The Geographical Distribution of Renewable Investments Geographical

2 the geographical distribution of renewable

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2) The Geographical Distribution of Renewable Investments: Geographical allocations for investments in wind and solar at different levels of renewable requirements are illustrated in Fig. 5. At 15% renewable penetration, the investment of wind
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CHEN et al. : POWER SYSTEM CAPACITY EXPANSION UNDER HIGHER PENETRATION OF RENEWABLES CONSIDERING FLEXIBILITY 6249 Fig. 6. Breakdown of costs associated with increased renewable penetration. power will be allocated to Gansu province, which hosts the best wind resources. At 25% and 35% of renewables, the investment will be allocated to both Gansu and Xinjiang. At 45% renew- ables, the investment of wind power will be allocated more evenly to different regions. Solar investment starts to kick-in after 55% of renewables, favoring Ningxia province, where the solar resource is not superior but the power grid can accom- modate more renewables-the level of wind investment in that province is lower. 3) Cost and Its Breakdown: The breakdown of generating costs at different levels of renewables is presented in Fig. 6. The increase of operational costs is associated with the higher penetration of renewables. The start-up cost becomes noticeable when the penetration of renewables reaches 35%. The total costs for starting up thermal units will reach 4.5 billion USD at 75% of RPS. The largest increase results from the investment cost of renewables. The generation cost is 0.2 RMB/kWh, and will reach 0.3 RMB/kWh at 45% penetration of renewables. The increase of 0.1 RMB/kWh amounts to only about 10% of current retail price for electricity in the region. The generation cost will increase significantly to 0.6 RMB/kWh at 75% renewable penetration. This is largely attributed to the high curtailment rate and accelerated increase in investment costs for wind and solar. C. The Comparison of Generation Mix and Costs With Different Low Carbon Policies The generation mix and costs for two policy scenarios are compared in Fig. 7: (i) 45% of RPS and (ii) a carbon tax of $70/ton. The revenue collected by the carbon tax is assumed to rebated to consumers. The two scenarios can realize the same level of CO 2 emission reductions. As indicated, the carbon tax scenario will increase the capacity of gas units, while reducing the capacity for coal and wind power relative to RPS scenario. The two scenario are similar in overall costs. The carbon tax scenario results in higher operational costs, offset by the lower investment cost for wind. D. The Impact of Storage on Optimal Generation Mix and Overall Costs To analyze the impact of energy storage on optimal gen- eration mix and overall costs for different level of renewable Fig. 7. Comparison of generation mix and costs for RPS and carbon tax. (a) Added generation capacity. (b) Cost breakdown. TABLE IV D ATA OF E NERGY S TORAGES Note: 1) This cost setting is employed in scenario (c), reflecting the projected decrease of storage costs.
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