The transformation of the electricity sector is a main element of the transition to a decarbonized economy. Conventional generators powered by fossil fuels have to be replaced by variable renewable energy (VRE) sources in combination with electricity storage and other options for providing temporal flexibility. We discuss the market dynamics of increasing VRE penetration and their integration in the electricity system. We describe the merit-order effect (decline of wholesale electricity prices as VRE penetration increases) and the cannibalization effect (decline of VRE value as their penetration increases). We further review the role of electricity storage and other flexibility options for integrating variable renewables, and how storage can contribute to mitigating the two mentioned effects. We also use a stylized open-source model to provide some graphical intuition on this. While relatively high shares of VRE are achievable with moderate amounts of electricity storage, the role of long-term storage increases as the VRE share approaches 100%.
This paper studies the realizability and compatibility of the three CEP2020 targets, focusing on electricity prices. We study the impact of renewables and other fundamental determinants on wholesale and household retail electricity prices in ten EU countries from 2008 to 2016. Increases in production from renewables decrease wholesale electricity prices in all countries. As decreases in prices should promote consumption, an apparent contradiction emerges between the target of an increase in renewables and the target of a reduction in consumption. However, the impact of renewables on the non-en…
In this paper we study the impact of errors in wind and solar power forecasts on intraday electricity prices. We develop a novel econometric model which is based on day-ahead wholesale auction curves data and errors in wind and solar power forecasts. The model shifts day-ahead supply curves to calculate intraday prices. We apply our model to the German EPEX SPOT SE data. Our model outperforms both linear and non-linear benchmarks. Our study allows us to conclude that errors in renewable energy forecasts exert a non-linear impact on intraday prices. We demonstrate that additional wind and solar…
The interplay between risk aversion and financial derivatives has received increasing attention since the advent of electricity market liberalization. One important challenge in this context is how to develop economically efficient and cost-effective models to integrate renewable energy sources (RES) in the electricity market, which constitutes a relatively new and exciting field of research. This paper proposes a game-theoretical equilibrium model that characterizes the interactions between oligopolistic generators in a two-stage electricity market under the presence of high RES penetration. …
Studies have evaluated the economic feasibility of 100% renewable power systems using the optimization approach, but the mechanisms determining the results remain poorly understood. Based on a simple but essential model, this study found that the bottleneck formed by the largest mismatch between demand and power generation profiles determines the optimal capacities of generation and storage and their trade-off relationship. Applying microeconomic theory, particularly the duality of quantity and value, this study comprehensively quantified the relationships among the factor cost of technologies…
Economic information from Smart Meter: Nexus Between Demand Profile and Electricity Retail Price Between Demand Profile and Electricity Retail Price
Stanford University（斯坦福大学）；GEIRI North America（通用电气研究院北美分部）；Beijing Electric power Economic Technology Research Institute（北京电力经济技术研究院）；Toulouse School of Economics（图卢兹经济学院）
We consider a two-stage market mechanism for trading electricity including renewable generation as an alternative to the widely used multi-settlement market structure. The two-stage market structure allows for recourse decisions by the market operator, which are not possible in today's markets. We allow for different conventional generation cost curves in the forward and the real-time stages. We have considered costs of demand response programs and black outs, and adopt a DC power flow model to account for network constraints. Our first result is to show existence (by construction) of a sequen…
Hydrogen can contribute substantially to the reduction of carbon emissions in industry and transportation. However, the production of hydrogen through electrolysis creates interdependencies between hydrogen supply chains and electricity systems. Therefore, as governments worldwide are planning considerable financial subsidies and new regulation to promote hydrogen infrastructure investments in the next years, energy policy research is needed to guide such policies with holistic analyses. In this study, we link a electrolytic hydrogen supply chain model with an electricity system dispatch model…
Comparing the Forecasting Performances of Linear Models for Electricity Prices with High RES Penetration
Free University of Bozen-Bolzano（博尔扎诺自由大学）；London Business School（伦敦商学院）；BI Norwegian Business School（挪威商业管理学院）；Vrije Universiteit Amsterdam（阿姆斯特丹自由大学）
