Cost Recovery Assessment of Wind Generation Considering Capacity Compensation in Power Spot Market

With the development of power market in China, the revenue composition for various types of generators have changed significantly. The construction of the new power system is accelerating with leading to an increasing penetration of renewable generation. Wind generation may face financial challenge with only generation revenue in the power spot market. A cost recovery analysis method for wind GENCOs is proposed with considering capacity compensation mechanism within the power market. Firstly, a Markov chain method is established for simulating wind power profile, and the Effective Load Carrying Capability (ELCC) parameter for wind power is computed using a sequential Monte Carlo simulation model for power system reliability evaluation. Secondly, wind GENCOs spot marker revenue is calculated through a spot market simulation model. An analysis was conducted on the cost recovery of wind power based on its spot market and capacity compensation revenue. The case study section analyzes the payback period of GENCOs under various scenarios, providing valuable insights for these companies to assess the economic benefits of wind projects.