April 1, 2004
John F. Kennedy School of Government, Harvard University

The cost of building and operating wind farms continues to decline. And governments increasingly encourage development of renewable energy resources. As a consequence, the amount of wind capacity is growing, raising important questions about the integration of wind output with electric-power systems. These questions have physical (especially reliability) and economic consequences. This report examines the integration of varying amounts of wind capacity (from 200 to 2,000 MW) with a small utility that has a peak load of less than 5,000 MW. The authors developed and applied quantitative methods to calculate the payments and charges to a wind farm from the day-ahead unit commitment through real-time minute-to-minute operations, encompassing four time periods:

1) Day-ahead unit commitment (12 to 36 hours before the operating hour),

2) Real-time dispatch (current operating hour),

3) Intrahour balancing (load following), and

4) Regulation.