A scenario based approach to designing electricity grids with high variable renewable energy penetrations in Ontario, Canada: Development and application of the SILVER model

- A new scenario-based production cost model entitled SILVER is proposed.
- Flexibility requirements for a 100% renewable electricity system are quantified.
- Distinct remuneration structures drive demand response and storage deployment.
- System flexibility and market design interdependence motivates integrated planning.

A new scenario-based electricity system model, SILVER, explores the trade-offs among alternative balancing strategies for high variable renewable energy (VRE) electricity grids. SILVER optimizes the asset dispatch for a user-defined electricity system configuration that specifies demand response availability, generation assets, storage assets, and transmission infrastructure. SILVER has been applied to twelve Ontario-based scenarios to explore the implications of high VRE penetrations in a 100% renewable scenario. The role that storage, demand response, electric vehicles, and transmission expansion might play in balancing VRE is analyzed. The results highlight the operational differences between balancing options: demand response, with a fixed price remuneration, is dispatched in proportion to net load curve variability, whereas storage technologies which take advantage of price arbitrage, are dispatched in proportion to marginal cost variability. GHG emissions fall with increasing VRE penetrations; however, there are local maxima when natural gas replaces nuclear generation, which interrupt this trend. Weak wind resources in the summer necessitate significant non-VRE capacity, which increases capital costs for higher VRE penetrations. Ontario planners have a number of interdependent challenges to contend with: integrating VREs on a nuclear-dominated system, mitigating wind's significant seasonal variability, and establishing effective remuneration mechanisms to improve grid flexibility.