Community Renewable Energy

Assessing the Capacity Value

A 1994 study for the Arizona Public Service Company found that the capacity value of a tracking photovoltaic system was about 80%, a fixed PV system 60%, and wind between 13 and 30%. (Paul Smith, “Value of Solar Thermal and Photovoltaic Power Plants to Arizona Public Service Company, ASME International Solar Energy Conference, 1994). Another 2003 study performed by the National Renewable Energy Lab provides a similar range of results.

The American Wind Energy Assocation, somewhat more optimistically provides the following rule of thumb for wind power plants:

the capacity value of adding a wind plant to a utility system is about the same as the wind plant's capacity factor multiplied by its capacity. Thus, a 100-megawatt wind plant with a capacity factor of 35% would be similar in capacity value to a 35-MW conventional generator. For example, in 2001 the Colorado Public Utility Commission found the capacity value of a proposed 162-MW wind plant in eastern Colorado (with a 30% capacity factor) to be approximately 48 MW. For more information on the Commission's finding, see
http://www.nrel.gov/docs/fy01osti/30551.pdf

This “rule of thumb” is probably at the very upper end of the range of capacity values that utilities might use. This is because it fails to take into account the seasonality of a wind resource. What if wind blows most in winter but the capacity is needed in the summer?

At the other end of the scale, some utility modelers refuse to give any capacity value at all to wind resources.

Several studies are underway to determine the capacity value of various renewable resources and ways to improve it.

Thus, when developers and utilities are in negotiations, it is important to gain agreement on the capacity value of the resource and to make sure that the capacity value is
recognized in the price paid.