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Start-up costs of thermal power plants in markets with increasing shares of variable renewable generation

Abstract

The emerging literature on power markets with high shares of variable renewable energy sources suggests that the costs of more frequent start-ups of thermal power plants may become an increasing concern. Here we investigate how this develops in Germany, where the share of variable renewables is expected to grow from 14% in 2013 to 34% in 2030. We show that the overall number of start-ups grows by 81%, while respective costs increase by 119% in this period. Related to variable renewables’ production, start-up costs increase by a mere €0.70 per additional megawatt hour. While the expansion of variable renewables alone would increase start-up costs, more flexible biomass power plants and additional power storage have counteracting effects. Yet changes in reserve provision and fuel prices increase start-up costs again. The relevance of start-up costs may grow further under continued renewable expansion, but could be mitigated by increasing system flexibility.

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Figure 1: Yearly numbers and costs of start-ups in baseline scenarios.
Figure 2: Yearly start-up costs relative to yearly variable costs of main technologies.
Figure 3: Separation of effects between 2013 and 2030.
Figure 4: Installed power generation capacities in Germany in baseline scenarios.

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Acknowledgements

We thank J. Diekmann, P. Hanemann, C. Kemfert, F. Kunz, K. Neuhoff and O. Tietjen as well as the participants of the July 2015 Strommarkttreffen in Berlin and the Berlin Conference on Energy and Electricity Economics 2015 for valuable comments on earlier drafts. We further thank V. d. O. Campos for assistance concerning the sensitivity with endogenous cross-border exchange. Not least, we also thank Stiftung Mercator and Agora Energiewende for funding this research as part of the project ‘A Renewable Energy Dominated Power Market: Challenges & Solutions for Market Design and Policy Instruments’. The views expressed here are our own.

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All authors jointly developed the research design. W.-P.S. developed and calibrated the model, carried out the simulations, and processed the model outcomes. All authors contributed to writing the article.

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Correspondence to Wolf-Peter Schill.

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The authors declare no competing financial interests.

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Supplementary Notes 1–5, Supplementary Tables 1–5, Supplementary Figures 1–12, Supplementary References. (PDF 856 kb)

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Schill, WP., Pahle, M. & Gambardella, C. Start-up costs of thermal power plants in markets with increasing shares of variable renewable generation. Nat Energy 2, 17050 (2017). https://doi.org/10.1038/nenergy.2017.50

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