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Wind power is the conversion of wind energy into a useful form of energy, such as using wind turbines to make electricity, windmills for mechanical power, windpumps for water pumping or drainage, or sails to propel ships. The total amount of economically extractable power available from the wind is considerably more than present human power use from all sources. Wind power, as an alternative to fossil fuels, is plentiful, renewable, widely distributed, clean, and produces no greenhouse gas emissions during operation, and the cost per unit of energy produced is similar to the cost for new coal and natural gas installations. A large wind farm may consist of several hundred individual wind turbines which are connected to the electric power transmission network. Offshore wind power can harness the better wind speeds that are available offshore compared to on land, so offshore wind power’s contribution in terms of electricity supplied is higher. Small onshore wind facilities are used to provide electricity to isolated locations and utility companies increasingly buy back surplus electricity produced by small domestic wind turbines. The construction of wind farms is not universally welcomed, but any effects on the environment from wind power are generally much less problematic than those of any other power source. A wind farm is a group of wind turbines in the same location used for production of electric power. A large wind farm may consist of several hundred individual wind turbines, and cover an extended area of hundreds of square miles, but the land between the turbines may be used for agricultural or other purposes. A wind farm may also be located offshore. In a wind farm, individual turbines are interconnected with a medium voltage (often 34.5 kV), power collection system and communications network. At a substation, this medium-voltage electric current is increased in voltage with a transformer for connection to the high voltage electric power transmission system. The surplus power produced by domestic micro-generators can, in some jurisdictions, be fed into the network and sold to the utility company, producing a retail credit for the micro-generators' owners to offset their energy costs. Electricity generated from wind power can be highly variable at several different timescales: from hour to hour, daily, and seasonally. Annual variation also exists, but is not as significant. Related to variability is the short-term (hourly or daily) predictability of wind plant output. Like other electricity sources, wind energy must be "scheduled". Wind power forecasting methods are used, but predictability of wind plant output remains low for short-term operation. Because instantaneous electrical generation and consumption must remain in balance to maintain grid stability, this variability can present substantial challenges to incorporating large amounts of wind power into a grid system. Intermittency and the non-dispatchable nature of wind energy production can raise costs for regulation, incremental operating reserve, and (at high penetration levels) could require an increase in the already existing energy demand management, load shedding, or storage solutions or system interconnection with HVDC cables. At low levels of wind penetration, fluctuations in load and allowance for failure of large generating units require reserve capacity that can also regulate for variability of wind generation. Wind power can be replaced by other power stations during low wind periods. Transmission networks must already cope with outages of generation plant and daily changes in electrical demand. Systems with large wind capacity components may need more spinning reserve. After knowing about some basic aspects, we have a relatively clear concept in many ways, such as wind farms, electricity generation,, variability and intermittency. So next, I will discuss the topic of this thesis, Capacity Credit. The capacity credit of wind power in a grid has received quite some attention in the past. In the early days of wind power, the capacity credit, or rather the perceived lack thereof, was a grave concern for the large-scale development of wind power on a nation-wide basis. Therefore, a number of studies were made since the 1970ies, arriving at the conclusion that wind power has a capacity credit and the capacity credit is around the mean wind power output for small penetrations of wind power in the grid, and drops to a value near the minimum wind power generation for larger penetrations. The value of wind energy has traditionally been assessed by a comparison of wind power output characteristics to those of conventional power plants. This reflects the cost-based planning paradigm of the regulated electricity market. The standard of measure of the comparison is the availability of both plant types. Forced outage rates of conventional plants and wind availability captured by the probability distributions of wind speed are aggregated to a cumulative availability function using reliability models. An acceptable loss of load probability determines the maximum load. On this basis capacity credit is calculated as an “equivalent capacity” of wind generators to conventional generators with respect to reliability. As available wind energy varies over time, capacity credit changes as well. Therefore the capacity credit in time of peak demand is generally used for further interpretation. Consequently, a high correlation between wind energy production and electricity demand would result in a high capacity credit assigned to wind generators. An intermittent energy source is any source of energy that is not continuously available due to some factor outside direct control. The intermittent source may be quite predictable, for example, tidal power, but cannot be dispatched to meet the demand of a power system. An example of intermittent sources is the wind. The concept that Capacity Credit of wind power is relativity newly so till now there is not a clear and agreed by all definition. Many researchers concentrate on whether or not wind has any "capacity credit" without defining what they mean by this and its relevance. Wind does have a capacity credit, using a widely accepted and meaningful definition, equal to about 20% of its rated output (but this figure varies depending on actual circumstances). This means that reserve capacity on a system equal in MW to 20% of added wind could be retired when such wind is added without affecting system security or robustness. UK academic commentator Graham Sinden, of Oxford University, argues that this issue of capacity credit is a "red herring" in that the value of wind generation is largely due to the value of displaced fuel-not any perceived capacity credit – it being well understood by the wind energy proponents that conventional capacity will be retained to "fill in" during periods of low or no wind. The main value of wind, (in the UK, 5 times the capacity credit value) is its fuel and CO2 savings. Wind does not require any extra back-up, as is often wrongly claimed, since it uses the existing power stations, which are already built, as back-up, and which are started up during low wind periods, just as they are started up now, during the non availability of other conventional plant. More spinning reserve, of existing plant, is required, but this again is already built and has a low cost comparatively. The capacity factor of a power plant is the ratio of the electrical energy produced in a given period of time to the electrical energy that could have been produced at continuous maximum power operation during the same period. For a conventional fossil-fuel power station, the capacity factor is determined by planned maintenance downtime, unplanned equipment failure, and by shutdowns when the station’s electricity is not needed. For wind and solar energy, power output is also determined by the availability of wind and sunlight. The maximum power output, or ‘installed capacity’, is a rather theoretical value that is rarely reached. It would be clearer to quote the mean power for solar and wind energy, but because peak power is more commonly quoted, it’s important to know the capacity factor as well, to make sense of the peak numbers. So after comprehending the capacity factor of wind?power generation, we know that’s the ratio between a wind farm’s average power output and its maximum or “nameplate” capacity. That ratio is usually between about 20% and 30%. That is, when averaged over a year, a wind farm produces about 20%–30% as much energy as it would if it operated continuously at its maximum power output. But with research growing, there is another more advanced key operating parameter for wind power generation, its “capacity credit”. Whereas the capacity factor is a measure of the average output of a wind farm, the capacity credit is a measure of the worst case minimum output that can be relied on as a part of the total system capacity. The capacity credit is the “firm” capacity of a wind farm that can be counted on as a reliable contribution to the sum of all grid capacity. The capacity credit of wind, is estimated by determining the capacity of conventional plants displaced by wind power, whilst maintaining the same degree of system security, in other words an unchanged probability of failure to meet the reliability criteria for the system. Alternatively, it is estimated by determining the additional load that the system can carry when wind power is added, maintaining the same reliability level. For low wind energy penetrations levels, the relative capacity credit of wind power (that is ‘firm’ capacity as a fraction of total installed wind power capacity) will be equal or close to the average production (load factor) during the period under consideration, which is usually the time of highest demand. For Northern European countries, this is winter time and the load factor is typically 25–30 percent onshore and up to 50 per cent offshore. The load factor determining the capacity credit in general is higher than the average yearly load factor. With increasing penetration levels of wind energy in the system, its relative capacity credit reduces. However, this does not mean that less conventional capacity can be replaced, but rather that a new wind plant added to a system with high wind power penetration levels will substitute less than the first wind plants in the system. Put another way, the capacity credit of a wind farm is the amount by which other generating capacity (such as coal, for example) can be removed from the grid without compromising reliability of supply. Wind is unusual, however, in the unpredictability of its output. It doesn’t have the fixed periodic variations of tidal or solar. This unpredictability of wind power makes the question of its capacity credit a rather complicated one. What, then, is the capacity credit of wind power? What is that minimum power capacity that a wind farm can reliably provide? Since a wind farm’s output can drop all the way to zero, it seems at first sight that the capacity credit of wind power must be zero. In fact that’s not the case. It would be true if the wind farm operated in isolation, but a wind farm is usually connected to a much larger supply grid. Supply and demand across the grid vary all the time, and energy planners have developed detailed statistical calculations to handle this problem. They plan grid capacity so as to meet a given “l(fā)oss of load probability”, or LOLP. The LOLP is the probability that generation will be insufficient to meet demand. Energy supply planners must ensure that there is sufficient capacity to keep the loss of load probability below some specified level, but they don’t want to spend money needlessly on surplus capacity beyond that. One issue of managing risk is that wind farms can be treated statistically in exactly the same way as conventional power plant. For any type of power plant it is possible to calculate the probability of it not being able to supply the expected load. As wind is variable, the probability that it will not be available at any particular time is higher. Wind power can be factored into the grid reliability statistics in exactly the same way as every other power source. Wind has a lower probability of being available, but that number is simply fed into the calculations. There is nothing qualitatively different about wind. Energy engineers have taken a careful look at the statistics of wind supply, and their conclusion is that wind has a significant capacity credit after all. How can this be? After all, the wind speed can drop all the way to zero. To answer that, we have to look at the supply statistics across the entire electricity grid. For example, when wind power is geographically dispersed, it becomes less likely that the wind will stop blowing at all wind farm sites simultaneously. That’s not to say it’s impossible, but it is less likely. Also, when wind strength and electricity demand correlate (for example, in regions where the wind is stronger during the winter) there is again a higher likelihood that wind will contribute to that demand. After then, what are the actual numbers for the capacity credit of wind power? The capacity credit of wind depends on the fraction of total grid capacity that is met by wind power. In the jargon, it depends on the “penetration” of wind power on the grid. “Wind energy penetration” is generally defined as the ratio of the total amount of wind energy produced in a year to the total electrical energy produced in a year for a given region, while “wind capacity penetration” is defined as the ratio of installed wind power capacity to peak load for a given region. When the amount of wind capacity is a negligible fraction of the total grid capacity, the capacity credit of the wind farm can be treated as being equal to the average power of the wind farm. That is, the capacity credit is the same as the capacity factor multiplied by the installed capacity. That’s because at very low levels of wind penetration, the grid can deal with fluctuations in wind output as part of its routine capability. As wind capacity increases to about 10% of total grid capacity, the capacity credit falls to about 20% of the installed capacity (peak power) of the wind farm. That is, the capacity credit is now lower than the average power of the wind farm. If still more wind farms are built, so that wind capacity increases to well above 10% of grid capacity, then wind starts to form a very substantial part of total electricity supply. There is now less leeway elsewhere in the system, and the capacity credit falls further still, to about 10% of installed capacity. That is, each 1?GW of installed wind capacity must be treated as only 100?MW of “firm” capacity. Put another way, each 1?GW of installed wind capacity allows 100?MW of conventional (gas or coal) capacity to be removed from the grid, although that wind capacity supplies about 300?MW of power on average (because it still has a 30% capacity factor). Since we have already known that the capacity credit of wind power generation can be quantificational, we will discuss how to calculate capacity credit of wind power generation. Power systems must have enough generation to meet demand at each moment of the day. In addition, they must also have enough reserve to deal with unexpected contingencies. The increase in the penetration of wind generation in recent years has led to a number of challenges in the calculations required to facilitate wind generation while maintaining the existing level of security of supply. A key calculation in this process is the capacity credit or value of wind generation. Capacity credit/value of wind generation can be broadly de?ned as the amount of ?rm conventional generation capacity that can be replaced with wind generation capacity, while maintaining the existing levels of security of supply. Power system reliability consists of system security and adequacy. A power system is adequate if there is a sufficient installed power supply to meet customer needs. A system is secure if it can withstand a loss (or potentially multiple losses) of key power supply components such as generators or transmission links. This paper focuses on the impact that wind generation has on generation adequacy. The analyses for generation adequacy are made several months or years ahead and associated with static conditions of the system. This can be studied by a chronological generation load model that can include transmission and distribution or by probabilistic methods. The estimation of the required production needs includes the system demand and the availability data of production units. Capacity credit is the contribution that a given generator makes to overall system adequacy. Even the availability of conventional generation is not assured at all times because there is always a nonzero risk of mechanical or electrical failure. Because reliability is expensive it is common to adopt a reliability target for the system. The capacity value of any generator is the amount of additional load that can be served at the target reliability level with the addition of the generator in question. Although there are several methods used to calculate wind capacity value, most methods are based on power system reliability analysis methods. The criteria that are used for the adequacy evaluation include the loss of load expectation (LOLE), the loss of load probability (LOLP) and the loss of energy expectation (LOEE), for instance. LOLP is the probability that the load will exceed the available generation at a given time. This criterion gives an idea of the possibility of system malfunction but it lacks information on the importance and duration of the outage. LOLE is the number of hours, usually per year, during which the load will not be met over a de?ned time period. One key capacity value metric is effective load carrying capability (ELCC). This metric is calculated by calculating a suitable reliability measure such as loss of load probability or loss of load expectation for the year. During the course of system operation through the year, generating units can be in one of several states. Units are scheduled for maintenance at regular intervals, and this is typically scheduled during noncritical system periods. However, it is always possible that any generator could fail unexpectedly at any time of the year. The unexpected nature of these forced outages is the primary concern and focus of reliability analysis. Contingency reserves (sometimes called disturbance re-serves) are provided to ensure against system collapse in the event of a forced outage. System adequacy assessments must take planned outages and forced outages into account, although the different types of outages are treated very differently in the reliability model. Additional considerations include hydro system operation, both run of river and reservoir hydro power (and pumped storage, if available). Other system services may also be quanti?ed in the reliability model. While hourly load and wind gen