Revenue Sufficiency and Reliability in a Zero Marginal Cost Future: Preprint
Features of existing wholesale electricity markets, such as administrative pricing rules and policy-based reliability standards, can distort market incentives from allowing generators sufficient opportunities to recover both fixed and variable costs. Moreover, these challenges can be amplified by other factors, including (1) inelastic demand resulting from a lack of price signal clarity, (2) low- or near-zero marginal cost generation, particularly arising from low natural gas fuel prices and variable generation (VG), such as wind and solar, and (3) the variability and uncertainty of this VG. As power systems begin to incorporate higher shares of VG, many questions arise about the suitability of the existing marginal-cost-based price formation, primarily within an energy-only market structure, to ensure the economic viability of resources that might be needed to provide system reliability. This article discusses these questions and provides a summary of completed and ongoing modelling-based work at the National Renewable Energy Laboratory to better understand the impacts of evolving power systems on reliability and revenue sufficiency.
- Research Organization:
- National Renewable Energy Lab. (NREL), Golden, CO (United States)
- Sponsoring Organization:
- USDOE Office of Energy Efficiency and Renewable Energy (EERE), Wind and Water Technologies Office (EE-4W)
- DOE Contract Number:
- AC36-08GO28308
- OSTI ID:
- 1335800
- Report Number(s):
- NREL/CP-6A20-66935
- Resource Relation:
- Conference: Presented at the 15th International Workshop on Large-Scale Integration of Wind Power into Power Systems as well as on Transmission Networks for Offshore Wind Power Plants, 15-17 November 2016, Vienna, Austria
- Country of Publication:
- United States
- Language:
- English
Similar Records
Wholesale electricity market design with increasing levels of renewable generation: Revenue sufficiency and long-term reliability
Wholesale electricity market design with increasing levels of renewable generation: Revenue sufficiency and long-term reliability