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The market value of variable renewables: The effect of solar wind power variability on their relative price

  • This paper provides a comprehensive discussion of the market value of variable renewable energy (VRE). The inherent variability of wind speeds and solar radiation affects the price that VRE generators receive on the market (market value). During windy and sunny times the additional electricity supply reduces the prices. Because the drop is larger with more installed capacity, the market value of VRE falls with higher penetration rate. This study aims to develop a better understanding on how the market value with penetration, and how policies and prices affect the market value. Quantitative evidence is derived from a review of published studies, regression analysis of market data, and the calibrated model of the European electricity market EMMA. We find the value of wind power to fall from 110% of the average power price to 50–80% as wind penetration increases from zero to 30% of total electricity consumption. For solar power, similarly low value levels are reached already at 15% penetration. Hence, competitive large-scale renewable deployment will be more difficult to accomplish than as many anticipate.
Metadaten
Document Type:Article
Language:English
Author(s):Lion HirthORCiD
Parent Title (English):Energy Economics
ISSN:0140-9883
Publisher:Elsevier B.V.
Publication year:2013
Publishing Institution:Hertie School
First Page:218
Last Page:236
DOI:https://doi.org/10.1016/j.eneco.2013.02.004
Release Date:2017/07/24
Tag:Cost-benefit analysis; Electricity markets; Intermittency; Market integration of renewables; Variable renewables; Wind and Solar power
Volume:38
Notes:
This is a post-peer-review, pre-copyedit version of an article published in Energy Economics. The final authenticated version is available online at the DOI 10.1016/j.eneco.2013.02.004.
Hertie School Research:Centre for Sustainability
Licence of document (German):Metadaten (öffentlich), post-print
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