Background
One of the key barriers to promoting grid-connected renewable energy (GRE) power generation (wind, solar) is that the supply from this generation source is unreliable. The reason is that the availability of the resource depends upon natural conditions beyond the control of the renewable energy developer. As a result, GRE power is not considered as ‘firm power’ that can be called upon when needed.
As a result, when an independent GRE developer sells power to the grid, the grid does not want to pay a ‘capacity credit’ to the developer, and would want to pay only the energy costs avoided by the grid. The reason is that the grid operator claims that since the grid has to build its own firm capacity, in case GRE power is not available, there are no capital cost savings for the grid.
