Adding Photovoltaics to the Saudi Power System

Key Points:

Intermittent generation from wind or photovoltaics (PV) imposes a cost on the power systems in which they are deployed. These costs vary regionally due to different fuel costs and ramping flexibility of existing grid capacities. With 2015 as a reference year, we examine the costs of PV intermittency and costs of integration to power utilities in Saudi Arabia, using a least-cost approach for the power utilities. The operational facets of PV integration to grid operators will be more pronounced with higher PV penetration, so, to focus on system operation, we exclude the capital costs. The excess of the price paid to new PV generators over the current average consumer tariff would also have to be covered by the utility, and will depend on the details of the power purchase contracts.
  • We define intermittency costs as the costs of ramping and maintaining spinning reserves. Integration costs are the sum of intermittency costs, plus the costs of grid upgrades that are needed when renewable deployment exceeds existing grid capacity.
  • The gross cost of intermittency, excluding any benefits attained from PV operation, rises to approximately 1.3 cents per kilowatt-hour (¢/kWh) of energy provided by PV when 20 GW of PV capacity are installed.
  • At low levels of penetration, renewables may impose negligible cost or even confer net benefits. However, above a certain level, the costs will outweigh the benefits – what we term the ‘‘Operational Blend Wall.’’
  • Adding up to 11 GW of PV generation capacity in some regions achieves lower system operating costs compared to a case without PV addition. Beyond 11 GW, costs begin to outweigh benefits, and the net cost to the power system increases by 0.04 ¢/kWh at 20 GW of PV deployment. This compares to an average cost of supply in the current power system of 1.61 ¢/kWh.
  • This operational blend wall of 11 GW is a function of overall system demand and the price of fuels displaced by PV electricity. If electricity prices were to rise to cover the integration costs, any resulting reduction in electricity use would reduce the blend wall. Similarly, increasing fuel prices would increase the blend wall.

About the Project

We developed the KAPSARC Energy Model (KEM) for Saudi Arabia to understand the dynamics of the country’s energy system. It is a partial equilibrium model formulated as a mixed complementarity problem to capture the administered prices that permeate the local economy. KEM for Saudi Arabia has been previously used to study the impacts of various industrial fuel pricing policies, improved residential energy efficiency on the energy economy, and the feasibility of installing coal-fired power plants in Saudi Arabia. In the present paper, we use it to assess the intermittency and integration costs of photovoltaics in the Saudi power system. Ongoing work revolves around CO2 emissions in the cement industry in KEM for Saudi Arabia, and generalizing the main results of this paper.
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