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Chapter 2 Overview of System Impacts of ... > 2.2 Role of Wind Forecasts in Wind P... - Pg. 7

2.2 Role of Wind Forecasts in Wind Power Economics 7 Generators that experience significant savings when not operating will be given lower priority. The prioritized, or `merit order', dispatch means power plants with the lowest variable costs are operated most frequently, and those with the highest variable costs are operated least frequently. In a generic sense, analysts group generators into three broad categories: peaking, intermediate load, and baseload units. Peaking units have the highest operating costs, baseload units the lowest operating costs, and intermediate load units are in between. These resources are `stacked up' in their merit order as illustrated in Figure 2.2 to meet customer demand, with baseload generation at the bottom of the stack, intermediate next, and peaking generation on top as needed. The ordering of generating unit dispatch minimizes overall operating costs. Much of the value of wind power is derived from the savings in operating costs and emissions associated with reducing generation from peaking and intermediate load units, as illustrated in Figure 2.2. 1 Peaking units are usually made up of lower efficiency single-cycle combustion turbines, or highly inefficient fossil-fueled steam boilers. The most expensive power plants to operate are energized with lowest priority in order to keep costs down. To the extent that wind generation causes greater sales or reduced