Modeling the optimal mix and location of wind and solar with transmission and carbon pricing considerations

Abstract

Abstract This study develops a model for calculating the optimal amount of transmission, wind, and solar capacity that should be built in a grid's different regions. It also presents a framework for choosing CO2 prices by balancing increasing system cost and flexibility requirements with CO2 emissions reductions. In a simulation of the ERCOT grid, the model suggests a 60 $/ton CO2 price and an optimal investment of 27.0 GW of transmission capacity to five different regions. These regions install a total of 26.6 GW of wind and 11.1 GW of solar, representing a grid with about 60% thermal and 40% renewable capacity. This renewable mix produces 110 TWh of energy per year, 34% of the total electricity demand. The grid emits 82.2 million tons of CO2 per year under this scenario, a 65% reduction from the 237 million tons produced when no renewable capacity is installed. At the optimal renewable development solution, all coal and natural gas boiler generators have capacity factors less than 20% with many of them not being dispatched at all. While these results are specific to ERCOT, the methods and model can be used by any grid with an aim for renewable energy capacity expansion.