Year: 2026
Type: article
Abstract: Integrating renewable energy into power grids is critical for advancing low-carbon transitions. However, the inherent variability of renewables requires flexible generation resources—predominantly thermal power units—to maintain real-time grid balancing. Although these flexible generators earn revenue from electricity production, they often incur significant deficits in recovering their upfront investment and retrofitting costs. While existing research has largely focused on short-term balancing expenses, this persistent investment gap remains underexplored. This article analyzes the causes of the investment deficit in the flexible generation assets needed to support renewable integration. To more comprehensively assess system integration costs, we propose a modeling framework that quantifies the investment and construction costs incurred due to renewable volatility. Through simulation, we estimate the required flexible capacity, associated costs, and operational revenues, thereby calculating the investment gap directly attributable to renewable integration. The model feasibility is further verified via sensitivity analysis. Additionally, the study outlines a conceptual cost allocation mechanism and demonstrates how the proposed method can be extended to assess other types of grid-supporting resources. These insights contribute to improved electricity market design, support evidence-based energy policymaking, and facilitate the market-oriented reform of the power sector.
Source: Processes
DOI: 10.3390/pr14030516
Institutions: State Grid Corporation of China (China), Chongqing University
Language: English
Subfield: Electrical and Electronic Engineering
Field: Engineering
Domain: Physical Sciences
Open Access status: gold
Estimated APC paid: $2,896
Award: G879851880
OpenAlex ID: W7127170337