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.

A Systematic Approach to 

Better Understanding 

Integration Costs

Gregory B. Stark, P.E.

National Renewable Energy Laboratory

Energy Policy Research Conference

Denver, Colorado

September 10, 2015

NREL/PR-5D00-64973
2

Integration Costs: Overview

• Introduction

• Integration costs definition

• Study approach

• Results

o New generation effects

o Operating parameters and self-scheduling effects

• Conclusions
3

Integration Costs: Three Questions

This work was sponsored by the Wind Program 

of the U.S. Department of Energy’s Office of 

Energy Efficiency & Renewable Energy to 

address three questions:

1. How does the addition of new generation affect 

a system’s operating costs?

2. How do generation mix and operating 

parameters and procedures affect costs?

3. How does the amount of variable generation 

impact the accuracy of natural gas orders? 
4

Integration Costs: Definition

Integration costs working definition:

• The change in production costs associated 

with a system’s ability to accommodate 

variability and uncertainty of the net load

Two sources of variability and uncertainty:

• Load

• Variable generation (VG)

Four components of production costs:

• Cycling costs

• Non-cycling VO&M costs

• Reserves provisioning costs

• Fuel costs
5

Integration Costs: Study Approach

Study approach:

o Production cost modeling-based (DA, 4HA, & 5-min RT)

o Modified IEEE 118-bus overlaid with real loads:

– Generation and transmission scaled by a factor of 2

– Updated to 40% coal with sensitivities at 15% and 65% coal

 40% coal, 47% gas, 11% hydro, and 2% VG

 Generator sizes ranged from 40 MW–840 MW, avg. size of 237 MW

– Three regions: Avg. load: 7,324 MW; Peak load: 11,765 MW

 Sacramento Municipal Utility District

 Public Service Company of Colorado

 Puget Sound Energy

– Load & VG data: 2020, WECC and NREL supplied

o Designed in consultation with TRC to provide a 

reasonable approximation to an actual interconnection
6

Integration Costs: New Generation

Two types of new generation:

• Additional variable generation

1. 10% VG

2. 20% VG

3. 40% VG

• New coal baseload

1. 840-MW flexible generation

2. 840-MW inflexible generation
7

New Generation: Operating Costs
8

New Generation: Cycling Cost Breakout

Type 10% VG 20% VG 40% VG

Flexible 

Coal

Inflexible 

Coal

Coal 0.14 0.12 0.26 0.30 0.30 

CC 0.49 0.52 0.30 0.15 (0.10)

CT Gas 0.43 0.57 0.75 0.08 0.09 

Wt. Avg. 1.12 1.35 1.47 0.57 0.31 

Increases (Decreases) in Cycling Costs per MWh of 

New Generation Added ($/MWh New Generation):

Coal

($/MWh)

CC

($/MWh)

CT Gas

($/MWh)

Wt. Avg.

($/MWh)

Reference 

Cycling Costs 0.26 0.47 6.34 0.43 
9

Integration Costs: Generation Mix

Three generation mixes:

• 15% Coal

• 40% Coal (Reference)

• 65% Coal
10

Generation Mix: Operating Costs
11

Generation Mix: Cycling Cost Breakout

Type 15% Coal

40% Coal

(Reference) 65% Coal

Coal 0.22 0.26 0.29 

CC 0.30 0.47 1.08 

CT Gas 4.51 6.34 7.67 

Wt. Avg. 0.37 0.43 0.55 

Average Cycling Costs by Generator Type ($/MWh Delivered):
12

Integration Costs: Operating Changes

Three types of operating changes:

• Gas prices

o $2.50/MMBtu, $4.50/MMBtu, $6.50/MMBtu

• Fast-start generation

o 4-hr coal, 1-hr CC (reference: 24-hr coal, 4-hr CC)

• Self-schedule

o Self-commit

o Self-dispatch
13

Operating Changes: Operating Costs
14

Operating Changes: Cycling Cost Breakout

Average Cycling Costs by Generator Type ($/MWh Delivered):

Type Reference

Low Gas 

Price

High Gas 

Price

Fast-Start 

Generation 50% SelfCommit 

50% SelfDispatch 

Coal 0.26 0.56 0.25 0.22 0.25 0.25 

CC 0.47 0.28 0.69 1.03 0.49 0.61 

CT Gas 6.34 5.68 7.60 99.98 6.62 2.54 

Wt. Avg. 0.43 0.46 0.55 0.83 0.44 0.49 
15

Integration Costs: Conclusions

• New generation:

o Cycling costs increased with both additional VG and new baseload

– $1.12 to $1.47 per MWh of new VG and $0.31 to $0.57 per MWh of new coal

o Non-cycling VO&M costs decreased with additional VG and increased with 

new baseload 

– A decrease of $1.28 to $1.52 per MWh of additional VG and an increase of $1.69 

to $1.83 per MWh of new baseload

o The largest impact on coal cycling costs was new baseload

o The largest impact on CC cycling costs was medium penetration VG

• Generation mix

o Cycling costs increased with increasing coal penetrations (54% higher at 

65% coal than at 15% coal) 

o Non-cycling VO&M costs increased with increasing coal penetrations (68% 

higher at 65% coal than at 15% coal) 

• Operational parameters and self-scheduling

o Self-scheduling increased both cycling (12% to 30%) and total generation 

(3%) costs
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.

A Systematic Approach to 

Better Understanding 

Integration Costs

Thanks! Questions?

Gregory B. Stark, P.E.

greg.stark@nrel.gov
17

Integration Costs: References

• IIT. 2013. “Index of Data Illinois Institute of Technology.” Accessed January 

2013: motor.ece.iit.edu/data/.

• Kumar, N., P. Besuner, S. Lefton, D. Agan, and D. Hilleman. 2012. Power Plant 

Cycling Costs. (Technical Report). NREL/SR-5500-55433. Work performed by 

Intertek-APTECH, Sunnyvale, California. Golden, CO: NREL. Accessed January 

2013: www.nrel.gov/docs/fy12osti/55433.pdf. 

• Lew, D., G. Brinkman, E. Ibanez, A. Florita, M. Heaney, B. Hodge, M. Hummon, 

and G. Stark. 2013. The Western Wind and Solar Integration Study Phase 2. 

(Technical Report). NREL/TP-5500-55588. Golden, CO: NREL. 

• Stark, G. 2015. A Systematic Approach to Better Understanding Integration 

Costs. NREL/TP-5D00-64502. (Technical Report). Golden, CO: NREL.

• WECC. 2011. Assumptions Matrix for the 2020 TEPPC Dataset. Accessed 

January 2013: 

www.wecc.biz/library/StudyReport/Documents/Assumptions%20Matrix%20fo

r%20the%202020 %20TEPPC%20Dataset.pdf.