As intermittent renewables penetrate further into the grid mix, reliable firm power generation is needed for whenever there is a shortfall. But back-up power, by its nature, has unreliable utilisation rates. And up-front costs for new plants are high, be they gas-fired plants, coal, nuclear, or large-scale storage. That makes future profitability uncertain, and private investors nervous. Hence the need for “capacity mechanisms” that guarantee additional payments to the back-up plant, making the investment financially viable and the grid stable. Cy McGeady at CSIS looks at how Germany, China and Texas are dealing with the issue, and what they can learn from each other. “Capacity adequacy” procurement will inevitably become a growing concern for policy makers, wherever they are, as the penetration of intermittent wind and solar continues apace.
A brief step beyond the confines of the U.S. electric power sector delivers an…
