NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

Policies and Programs to 

Integrate High Penetrations 

of Variable Renewable 

Energy

Jaquelin Cochran, Ph.D.

15 May 2012

World Renewable Energy Forum

Denver, Colorado

NREL/PR-6A20-54970
2

Goals of Project

• Highlight the diverse 

approaches for enabling 

high renewable energy 

penetration 

• Synthesize lessons on 

effective policies and 

programs 

• Present avenues for action 

to energy ministers and 

other stakeholders

Photo from Invenergy LLC, NREL/PIX 16037
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Approach 

• Case studies

o Australia

o Denmark

o Germany

o Ireland

o Spain

o United States: 

Colorado & Texas

• Comparative analysis 

• Extensive stakeholder 

consultations Photo by Dennis Schroeder, NREL/PIX 20423 
4

Sponsors and Expert Team 

• Supported by the Clean 

Energy Ministerial

• Experts from diverse 

institutions:

Australian Energy Market Operator, Bloomberg 

New Energy Finance, Energinet.dk, Global Green 

Growth Institute, International Energy Agency, 

Institute for Sustainable Energy Policies, Johns 

Hopkins University, National Renewable Energy 

Laboratory, REN21, Risø, Spanish Ministry of 

Industry, Energy, and Tourism, United Nations 

Environment Programme, UNIDO, University 

College Dublin, University New South Wales, Utility 

Variable Generation Integration Group, VTT 

Finland, World Economic Forum Photo by Dennis Schroeder, NREL/PIX 19887
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Country % Renewable Generation (2010)

Australia 8%

China 19%

Denmark 34%

Germany 18%

India 15%

Ireland 13%

Mexico 18%

Spain 34%

Thailand 8%

United Kingdom 7%

United States 11%

RE has achieved varying degrees of penetration

Source: U.S. EIA, International Energy Statistics 

Highest 

penetration on 

annual basis
6

Challenges: An Overview

• Grids and markets were traditionally not designed to accommodate 

significant amounts of variable generation

• Variable renewable generation may be

— located far away from load centers, and require new 

transmission

— more distributed and located closer to population centers, and 

thus more ‘visible’ to the public
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Specific Implementation Challenges

• Legal, market, and institutional barriers—Increasing power system 

flexibility needed to integrate variable RE (e.g., through larger 

balancing areas, new market rules) may require significant 

ecosystem-wide changes 

• Coordination—Due to the involvement of multiple agencies and 

jurisdictions, developing and implementing a shared vision could 

be challenging

• Public support—The public may not understand or support actions 

necessary to integrate renewables

• Customizing solutions—There is no one-size-fits-all solution to 

integrating variable renewables; countries need to determine the 

most appropriate combination of approaches
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Addressing The Challenge

• What approaches from the public and private 

sectors have most effectively enabled the 

integration of variable renewables? 

• How should countries tailor these approaches for 

a given market, geographic, and institutional 

context?

• How can human and institutional capacity be 

strengthened to meet this challenge? 
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Actions to Accommodate High RE 

A. Lead public engagement, particularly for new 

transmission 

B. Coordinate and integrate planning

C. Develop rules for market evolution that 

enable system flexibility

D. Expand access to diverse resources and 

geographic footprint of operations

E. Improve system operations 
10

Actions Reflect Market Status

Source: NREL 
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A. Lead Public Engagement, New Transmission

Examples

Texas: New transmission lines were key 

to integration; line construction, often 

resisted, was successful due to extensive 

and varied opportunities for public 

feedback

California’s Renewable Energy 

Transmission Initiative—diverse, credible 

30 person steering committee committed 

to achieving consensus and publicly 

supporting outcomes

Denmark, to address public concerns 

about aesthetics, plans to bury its entire 

high voltage grid by 2030 

What Worked: Communicated to the public why new 

transmission is essential

Source: Public Utility Commission of Texas, Docket No. 35665, Nov. 14, 2008. Public domain. 
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B. Coordinate and Integrate Planning 

Examples

Australia: National-scale studies provide 

information, but complex spot market 

pricing has guided investment in both 

generation and transmission. Pricing 

includes

– Location-specific multiplier on 

regional price to reflect losses

– Connection costs

– Congestion-based pricing

Texas: Centralized planning has guided 

decisions. Competitive Renewable Energy 

Zones (CREZ) allow generation and 

transmission to be developed in 

coordination. Rate payers, not developers, 

absorb financial risk.

What Worked: Improved capacity of planners to handle added 

complexity

Source: Australian Energy Market Operator 
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What Worked: Identified potential impacts of variable 

generation on electricity markets and generator compensation

C. Market Design for System Flexibility

Examples 

Denmark: 

– Large power pool provides greater flexibility, 

e.g., Norway’s hydro is critical to 

accommodating high wind penetrations

– Regulating Power Market operates up to 15 

minutes before delivery

– Negative pricing provides economically 

efficient way to reduce output during excess 

generation

– Combined heat and power (CHP) required to 

participate in spot power market

Australia: Subhourly (5 min) dispatch intervals 

reduce need for ramping and improve forecast 

accuracy. Nodal and negative pricing encourage 

market efficient location strategies. Source: Energinet.dk 
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What Worked: Evaluated options to overcome institutional challenges 

in merging or increasing cooperation among balancing areas 

D. Expand Diversity, Geographic Footprint

Examples 

Ireland—has twice sought both to reduce its 

vulnerability to weather variability and also to 

strengthen its power system through expanding 

regional integration

– Single Electricity Market with Northern 

Ireland: required for all electricity >10 MW 

sold and bought in Ireland; no bilateral 

transactions permitted

– 500 MW East-west interconnector to U.K. 

(under construction)

U.S. West lacks an organized wholesale electric 

market, but an Energy Imbalance Market has been 

proposed to allow balancing areas to share 

reserves, and—through this broader diversity—

reduce the system-wide variability of RE

Source: Global Energy Network Institute
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What Worked: Supported use of forecasting best practices; 

training on best practices for grid operators 

E. Improve System Operations

Examples 

Spain’s Control Centre for Renewable Energies 

– Monitors RE installations real-time

– Wind farms >10 MW & PV>2MW provide 

reactive power support 

– 97.5% of wind farms have fault-ride through 

capability

– New operational procedures proposed to 

maintain optimal voltage control 

Australia: Market operators use forecasting model 

that integrates forecasts from a variety of sources

Denmark: System operator uses multiple, advanced 

forecasts in planning, congestion management, 

dispatch, and to assess need for regulating power

Photo from Red Eléctrica Española 
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System-wide Approach More Effective 

Source: NREL 
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Key Findings—Leadership Actions to Consider

1. Lead the advancement of the technical, institutional, 

human capital, and market institutions required to 

enable renewable energy integration 

2. Develop visionary goals and plans at national and 

regional levels, and empower appropriate leadership 

to bring the visions to fruition

3. Lead the public engagement to communicate goals 

and needed actions to attain them

4. Engage in international coordination to share best 

practices and strengthen technical, human and 

institutional capabilities to achieve higher levels of 

renewable energy penetration
Thank you

Jaquelin Cochran

Jaquelin.Cochran@nrel.gov