Concentration versus diversification: A spatial deployment approach to improve the economics of wind power

Abstract

Previous studies on the economics of onshore wind parks in Germany found that geographic diversification results in minor system costs savings (Pfluger et al., 2017a). Furthermore, such diversification does not necessarily result in higher market values (Eising et al., 2020) or better merchant profitability (Klie and Madlener, 2022). Therefore, the question arises whether an alternative allocation (i.e. concentration rather than diversification) of the German wind park fleet is more economical. In this paper, we compare the future (2030) market values, subsidy needs and total system costs (excl. intra-national grid costs due to congestion, redispatch and curtailment) of a more concentrated versus a more diversified allocation of onshore wind turbines in Germany. The results show that a concentration of turbines, in areas where the gap between market values and levelized costs of electricity is smallest (i.e. Northern Germany), is more beneficial in terms of subsidy need and system costs (ignoring congestion, redispatch and curtailment). The analysis further shows that these areas are also more beneficial in terms of market values, when using system-friendly turbine configurations selected based on the same approach. To incentivize such a selection of areas and turbine configurations based on minimal gaps between market values and levelized costs an alternative renewables support scheme is presented, which favors such minimal gaps in its auctioning process.