Impacts of variable renewable energy on wholesale markets and generating assets in the United States: A review of expectations and evidence

Mills, Andrew D.; Levin, Todd; Wiser, Ryan; Seel, Joachim; Botterud, Audun

doi:10.1016/j.rser.2019.109670

Impacts of variable renewable energy on wholesale markets and generating assets in the United States: A review of expectations and evidence

Journal Article · Mon Dec 23 00:00:00 EST 2019 · Renewable and Sustainable Energy Reviews

DOI:https://doi.org/10.1016/j.rser.2019.109670· OSTI ID:1615314

Mills, Andrew D. ^[1]; Levin, Todd ^[2]; Wiser, Ryan ^[1]; Seel, Joachim ^[1]; Botterud, Audun ^[2]

Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
Argonne National Lab. (ANL), Argonne, IL (United States)

Here, we synthesize available literature, data, and analysis on the degree to which growth in variable renewable energy (VRE) has impacted or might in the future impact bulk power system assets, pricing, and costs in the United States. Most studies of future scenarios indicate that VRE reduces wholesale energy prices and capacity factors of thermal generators. Traditional baseload generators are more exposed to these changing market conditions than low-capital cost and more flexible intermediate and peak-load generators. From analysis of historical data we find that VRE is already influencing the bulk power market through changes in temporal and geographic patterns areas with higher levels of VRE. The most significant observed impacts have concentrated in areas with significant VRE and/or nuclear generation along with limited transmission, with negative pricing also often occurring during periods with lower system-wide load. So far, however, VRE, has had a relatively modest impact on historical average annual wholesale prices across entire market regions, at least in comparison to other drivers. The reduction of natural gas prices is the primary contributor to the decline in wholesale prices since 2008. Similarly, VRE impacts on thermal plant retirements have been limited and there is little relationship between the location of recent retirements and VRE penetration levels. Finally, although impacts on wholesale prices have been modest so far, impacts of VRE on the electricity market will be more significant under higher VRE penetrations.

View Accepted Manuscript (DOE)

Research Organization:: Argonne National Laboratory (ANL), Argonne, IL (United States); Lawrence Berkeley National Laboratory (LBNL), Berkeley, CA (United States)

Sponsoring Organization:: USDOE Office of Electricity (OE)

Grant/Contract Number:: AC02-05CH11231; AC02-06CH11357

OSTI ID:: 1615314

Alternate ID(s):: OSTI ID: 1812209
OSTI ID: 1580203

Journal Information:: Renewable and Sustainable Energy Reviews, Journal Name: Renewable and Sustainable Energy Reviews Journal Issue: C Vol. 120; ISSN 1364-0321

Publisher:: ElsevierCopyright Statement

Country of Publication:: United States

Language:: English

References (24)

Solar PV integration cost variation due to array orientation and geographic location in the Electric Reliability Council of Texas Deetjen, Thomas A.; Garrison, Jared B.; Rhodes, Joshua D. Applied Energy, Vol. 180 https://doi.org/10.1016/j.apenergy.2016.08.012	journal	October 2016
The market value of variable renewables Hirth, Lion Energy Economics, Vol. 38 https://doi.org/10.1016/j.eneco.2013.02.004	journal	July 2013
Economic and technical challenges of flexible operations under large-scale variable renewable deployment Bistline, John E. Energy Economics, Vol. 64 https://doi.org/10.1016/j.eneco.2017.04.012	journal	May 2017
The merit-order effect: A detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany Sensfuß, Frank; Ragwitz, Mario; Genoese, Massimo Energy Policy, Vol. 36, Issue 8 https://doi.org/10.1016/j.enpol.2008.03.035	journal	August 2008
The impact of wind generation on the electricity spot-market price level and variance: The Texas experience Woo, C. K.; Horowitz, I.; Moore, J. Energy Policy, Vol. 39, Issue 7 https://doi.org/10.1016/j.enpol.2011.03.084	journal	July 2011
Electricity-market price and nuclear power plant shutdown: Evidence from California Woo, C. K.; Ho, T.; Zarnikau, J. Energy Policy, Vol. 73 https://doi.org/10.1016/j.enpol.2014.05.027	journal	October 2014
Electricity market design for generator revenue sufficiency with increased variable generation Levin, Todd; Botterud, Audun Energy Policy, Vol. 87 https://doi.org/10.1016/j.enpol.2015.09.012	journal	December 2015
Business case uncertainty of power plants in future energy systems with wind power Brouwer, Anne Sjoerd; van den Broek, Machteld; Özdemir, Özge Energy Policy, Vol. 89 https://doi.org/10.1016/j.enpol.2015.11.022	journal	February 2016
Merit-order effects of renewable energy and price divergence in California’s day-ahead and real-time electricity markets Woo, C. K.; Moore, J.; Schneiderman, B. Energy Policy, Vol. 92 https://doi.org/10.1016/j.enpol.2016.02.023	journal	May 2016
Impact of renewables on electricity markets – Do support schemes matter? Winkler, Jenny; Gaio, Alberto; Pfluger, Benjamin Energy Policy, Vol. 93 https://doi.org/10.1016/j.enpol.2016.02.049	journal	June 2016
The plunge in German electricity futures prices – Analysis using a parsimonious fundamental model Kallabis, Thomas; Pape, Christian; Weber, Christoph Energy Policy, Vol. 95 https://doi.org/10.1016/j.enpol.2016.04.025	journal	August 2016
The retirement cliff: Power plant lives and their policy implications Rode, David C.; Fischbeck, Paul S.; Páez, Antonio R. Energy Policy, Vol. 106 https://doi.org/10.1016/j.enpol.2017.03.058	journal	July 2017
An analysis of the decline of electricity spot prices in Europe: Who is to blame? Bublitz, Andreas; Keles, Dogan; Fichtner, Wolf Energy Policy, Vol. 107 https://doi.org/10.1016/j.enpol.2017.04.034	journal	August 2017
Early nuclear retirements in deregulated U.S. markets: Causes, implications and policy options Haratyk, Geoffrey Energy Policy, Vol. 110 https://doi.org/10.1016/j.enpol.2017.08.023	journal	November 2017
The impact of wind power on electricity prices Brancucci Martinez-Anido, Carlo; Brinkman, Greg; Hodge, Bri-Mathias Renewable Energy, Vol. 94 https://doi.org/10.1016/j.renene.2016.03.053	journal	August 2016
Balancing power and variable renewables: Three links Hirth, Lion; Ziegenhagen, Inka Renewable and Sustainable Energy Reviews, Vol. 50 https://doi.org/10.1016/j.rser.2015.04.180	journal	October 2015
Integration of Variable Generation, Cost-Causation, and Integration Costs Milligan, Michael; Ela, Erik; Hodge, Bri-Mathias The Electricity Journal, Vol. 24, Issue 9 https://doi.org/10.1016/j.tej.2011.10.011	journal	November 2011
Wholesale electricity market design with increasing levels of renewable generation: Revenue sufficiency and long-term reliability Milligan, Michael; Frew, Bethany A.; Bloom, Aaron The Electricity Journal, Vol. 29, Issue 2 https://doi.org/10.1016/j.tej.2016.02.005	journal	March 2016
Wholesale electricity market design with increasing levels of renewable generation: Incentivizing flexibility in system operations Ela, E.; Milligan, M.; Bloom, A. The Electricity Journal, Vol. 29, Issue 4 https://doi.org/10.1016/j.tej.2016.05.001	journal	May 2016
Fuel Prices, Emission Standards, and Generation Costs for Coal vs Natural Gas Power Plants Pratson, Lincoln F.; Haerer, Drew; Patiño-Echeverri, Dalia Environmental Science & Technology, Vol. 47, Issue 9 https://doi.org/10.1021/es4001642	journal	April 2013
Wind Power and Electricity Prices at the PJM Market Gil, Hugo A.; Lin, Jeremy IEEE Transactions on Power Systems, Vol. 28, Issue 4 https://doi.org/10.1109/TPWRS.2013.2260773	journal	November 2013
The Impact of Wind Generation on Wholesale Electricity Prices in the Hydro-Rich Pacific Northwest Woo, Chi-Keung; Zarnikau, Jay; Kadish, Jonathan IEEE Transactions on Power Systems, Vol. 28, Issue 4 https://doi.org/10.1109/TPWRS.2013.2265238	journal	November 2013
Assessment of RES technology market values and the merit-order effect – an econometric multi-country analysis Welisch, Marijke; Ortner, André; Resch, Gustav Energy & Environment, Vol. 27, Issue 1 https://doi.org/10.1177/0958305X16638574	journal	February 2016
What caused the drop in European electricity prices? A factor decomposition analysis Hirth, Lion The Energy Journal, Vol. 39, Issue 1 https://doi.org/10.5547/01956574.39.1.lhir	journal	January 2018

Cited By (1)

The Economics of Variable Renewables and Electricity Storage Prol, Javier López; Schill, Wolf-Peter arXiv https://doi.org/10.48550/arxiv.2012.15371	text	January 2020

Similar Records

Impacts of Variable Renewable Energy on Bulk Power System Assets, Pricing, and Costs

Technical Report · Tue Nov 28 23:00:00 EST 2017 · OSTI ID:1411668

Impacts of High Variable Renewable Energy Futures on Wholesale Electricity Prices, and on Electric-Sector Decision Making

Technical Report · Fri May 11 00:00:00 EDT 2018 · OSTI ID:1437006

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
Electricity markets
Electricity prices
Generator profitability
Variable renewable energy
Variable renewable energyElectricity marketsElectricity pricesGenerator profitability

Impacts of variable renewable energy on wholesale markets and generating assets in the United States: A review of expectations and evidence

Citation Formats

References (24)

Cited By (1)

Similar Records

Related Subjects