Why we must move beyond LCOE for renewable energy design

• Wind and solar generation devaluation occurs for grids with high renewable shares This effect, due to intermittency, dramatically reduces the value of generated energy Cost Valued Energy can be used account this intermittency penalty Minimizing COVE improve VRE system design better meet demand The inherent wind challenges relevance Levelized (LCOE) their future which neglects time-varying price electricity. (COVE) is an improved valuation metric that takes into time-dependent electricity prices. In particular, it integrates short-term (e.g., hourly) “generation devaluation”, whereby and/or lead low, even negative, prices penetration. These aspects are demonstrated quantified using examples two large three approaches model hourly price: 1) residual demand, 2) generation, 3) statistical price-generation correlation. All indicate significant devaluation. approach provides most accurate information while correlations show pronounced Variable Renewable (VRE) dominates market share California Germany). some cases, cost valued relative levelized 43% higher (CAISO) 129% (ERCOT). indicates a much more relevant than LCOE in such markets. based on annualized costs spot revenue, thus considers economic effects vs. revenue as well those supply demand. As such, (instead LCOE) recommended next-generation systems, including storage integration tradeoffs. However, work needed develop models projected markets classify grid characteristics we head carbon-neutral future.