Economic impact of 2020 renewable energy scenarios on the Spanish electricity market

Abstract

In order to meet the 20-20-20 European energy policy commitments Spain should continue increasing the amount of electricity production from renewable energy sources (RES) along this decade. This paper analyzes the impact of the future RES deployment on the Spanish power system. Six scenarios are defined by setting different RES installed capacity targets and considering the uncertainty in fuel prices. First, the generation mix is planned for the horizon 2010–20 calculating the investment required in conventional thermal generation for each scenario. Then the system operation, hour by hour, is simulated in 2020 for each generation mix in each scenario. Operational fuel and carbon emission costs are calculated. Costs associated with operational reserves and wind curtailment to counteract or wind power intermittency and predictability errors are also computed. Finally, total systems costs, both investment and operating costs, are compared in the considered scenarios. The economic impact on electricity prices and operational margins of actual power plants is also discussed.