Calculating system integration costs of low-carbon generation technologies in future GB electricity system

Abstract

System integration costs (SIC) of generation technologies, also referred to as system externalities, include various categories of additional costs that are incurred in the system in addition to the cost of building and operating the generation capacity that is added to the system. SIC may include increased balancing cost, cost of additional backup capacity, cost of reinforcing network infrastructure and the cost of maintaining system carbon emissions. In this paper we present a whole-system approach to quantifying the SIC and explore different approaches to calculating the relative SIC of a generation technology when compared to another technology. The results show that the SIC of low-carbon generation technologies will significantly depend on the composition of the generation mix, with higher penetrations of variable renewables giving rise to a higher SIC. Also, SIC will significantly depend on the deployment level of flexible options such as more flexible generation technologies, energy storage, demand side response or interconnection. The additional system cost driven by low-carbon technologies can provide a very useful input to inform the energy policy and support the selection of the low-carbon portfolio with the lowest total system cost.