Measuring Wind Plant Capacity Value

Electric utility planners and wind energy researchers pose a common question: What is the capacity value of a wind plant? Tentative answers, which can be phrased in a variety of ways, are based on widely varying definitions and methods of calculation. From the utility's point of view, a resource that has no capacity value also has a reduced economic value. Utility planners must be able to quantify the capacity value of a wind plant so that investment in conventional generating capacity can be potentially offset by the capacity value of the wind plant. Utility operations personnel must schedule its conventional resources to ensure adequate generation to meet load. Given a choice between two resources, one that can be counted on and the other that can't, the utility will avoid the risky resource. This choice will be reflected in the price that the utility will pay for the capacity: higher capacity credits result in higher payments. This issue is therefore also important to the other side of the power purchase transaction – the wind plant developer. Both the utility and the developer must accurately assess the capacity value of wind. This article summarizes and evaluates some common methods of evaluating capacity credit. During the new era of utility deregulation in the United States, it is clear that many changes will occur in both utility planning and operations. However, it is my judgement that the evaluation of capacity credit for wind plants will continue to play an important part in renewable energy development in the future.