Wind power price regulation considering wind power fluctuation

Abstract

Wind power penetration to power systems is increasing rapidly in the recent years due to its environmental benefit, while wind power fluctuation also brings some problems to power system operation which impacts the transmission company's willingness to accept wind power. The most serious conflict influencing wind power development is that the currently adopted price of wind power on-grid does not take this fluctuation or the impact on the system operation into account. Currently, quotas and enforcing access is broadly used in wind power regulation. It is now required that all wind power output should be accepted by the grid, and is rewarded with a guided rate. But with the increase of wind power penetration to power grid, a more effective price regulation to wind power should be set up with wind output uncertainty into account. This paper takes wind farms in different areas in China as the research objects and uses accounting cost analysis approach to calculate wind power costs, which enables the wind farms in different areas to get the same rate of return on investment as that of thermal power plants. These tariffs will be derived as a basic price for the reference by the power grid then. The basic wind power prices are multiplied by a penalty factor which is an innovative as the final prices paid to the wind farms. The penalty factor is related to the accuracy of wind power output. If the accuracy of the wind farm output is higher than that of the regional average one, the penalty factor will be greater than one, so that the really paid wind power price is higher than the base value and the income of the wind farm will be increased, otherwise the earnings will be reduced. To illustrate the problem, an example is given. The use of this penalty factor will eventually help stimulate wind farms to improve the accuracy of wind power output, and improve the stable operation of the systems with large wind power penetration, and promote the sustainable development of wind farms.