Calculation of Payments for Renewable Energy Systems

1. Calculation of Payments for Renewable Energy Systems Roland Clarke PhD Project Manager Caribbean Renewable Energy Development Programme, CREDP CARICOM Secretariat Combined Heat and Power Systems in the Caribbean Sugar Cane Industry, Savannah Hotel, Hastings, Barbados 18-20 April 2006

2. Payment for Net Energy Output

3. Understanding Avoided Costs • Assumptions • Peak Load = 150 MW • No over capacity • Merit order dispatch, with unit commitment • No energy from RE plant during peak load period i.e. 6:00 PM and 9:00 PM

4. Plant

5. Daily Load Profile (MW)

7. Dispatch

9. Impact on Dispatch by RE

10. Summary of this Example • RE avoids energy from base loaded Steam and LS Diesel, and intermediate loaded MS Diesels – avoided energy and variable O&M payments due • RE does not avoid energy from Combustion and Gas Turbines – no avoided capacity payments due • RE may delay the next base load plant – capacity payments due ?? • Avoided costs should be determined and published • PPA payments should not exceed avoided costs • Payments subject to negotiation in the absence of Government policy or regulatory ruling