Promoting the System Integration of Renewable Energies: Toward a Decision Support System for Incentivizing Spatially Diversified Deployment

Abstract

The system integration of intermittent renewable energies (RE) poses an important challenge in the transition toward sustainable energy systems. Their intermittency introduces variability into electricity generation, leading to high ancillary service costs and technical issues impairing grid stability and supply reliability. These issues can be mitigated through spatially diversified capacity deployment, as RE intermittency can be geographically smoothed over sufficiently large regions. Following a design science research approach, we develop a model for the quantification of location-based investment incentives in RE support mechanisms to foster spatially diversified capacity deployment. We evaluate the modeling approach in a simulation study with focus on diversifying wind energy deployment in Mexico under an idealized auction mechanism and demonstrate how location-based investment incentives reduce resource-dependent competition among projects. Our research contributes a nascent design theory that combines the kernel theories for identifying favorable spatial distributions of RE capacity with current policy designs to support capacity expansion management