Status: Published
Citation: Bistline, J. 2018. “Turn Down for What? The Economic Value of Operational Flexibility in Electricity Markets.” Published in IEEE Transactions on Power Systems.
Flexibility is increasingly important in power sector planning, especially as low natural gas prices and proliferating renewables increase net load variability and cycling for grid-connected assets. This analysis explores how enhanced flexibility through lower minimum load levels for coal- and natural-gas-fired power plants can impact operations and profitability. Using EPRI’s United States Regional Economy, Greenhouse Gas, and Energy (US-REGEN) model, this work examines the economic value of this flexibility and variation across different regions, generation asset types, and market environments (e.g., level of variable renewable deployment). Model results suggest that lower minimum loads are most valuable for mid-merit order units with intermediate capacity factors, policy conditions that rearrange the merit order (e.g., carbon pricing), regions and scenarios that do not force seasonal layup of assets, and units that are more flexible than generators with otherwise similar characteristics. The scenarios described in this analysis show that plant flexibility affects operations more than annual profitability, which may have a higher system value for integrating renewables than a private value for the flexible unit. Additionally, this analysis quantifies how revenues from ancillary services markets can boost the value of lower minimum loads, especially for efficient natural gas combined cycle units, but total market size and depth are uncertain.
Link to Journal article: IEEE Transactions on Power Systems