Assessing the CO2-emission risk due to wind-energy uncertainty

Abstract

Wind power is a significant source of renewable energy, supporting reductions in emissions. However, the intermittency of wind power will cause uncertain carbon emissions and risks greenhouse-gas emission reduction. To address this issue, we analyzed the mechanism that converts wind-energy intermittency to carbon-emission uncertainty and developed metrics to assess the consequential risks of excessive carbon emissions. According to our empirical analyses on two American electricity markets, the Electric Reliability Council of Texas (ERCOT) and Pennsylvania-New Jersey-Maryland Interconnection (PJM), we found their carbon-emission risk is significant over the coming decade. The ten-year aggregated CO2 emissions between 2020 and 2030 have a 10% chance of exceeding their expected levels by 100 megatons. Our further analysis also shows that the CO2-emission risk is induced by the uncertainty of annual generation uncertainties and volatilities in the hourly wind power supply. Particularly, the two driving forces contribute heterogeneously to the carbon-emission risk in the two studied markets. Although the annual-generation randomness causes similar degrees of carbon-emission uncertainty in the two markets, the volatility-driven risk is only significant in the PJM market. According to the risk analyses, we suggested two types of investigations that are foundations for risk management: assessing the necessary installed capacity of wind energy that limits CO2-emission risk at desired confidence levels, and exploring hours when carbon emission is sensitive to wind-power volatility. The former helps set renewable-energy targets, while the latter is critical for designing policies hiring energy storage and zero-carbon generation technologies.