Intermittency or Uncertainty? Impacts of Renewable Energy in Electricity Markets

Paige Weber and Matt Woerman

No 9902, CESifo Working Paper Series from CESifo

Abstract: Renewable energy resources possess unique characteristics—intermittency and uncertainty— that pose challenges to electricity grid operations. We study these characteristics and find that uncertainty, represented by wind forecast error, has larger grid impacts than intermittency, or hourly generation changes. Uncertainty yields roughly double the price effects and roughly double the number of conventional generator start-ups, as compared to perfectly forecast wind. While this finding is important given the persistence of wind forecast error over the study period, reducing wind forecast error to the level of demand forecast error would lower costs by a modest half a million dollars per year.

Keywords: renewable energy; electricity prices and price dispersion; electricity grid management (search for similar items in EconPapers)
JEL-codes: Q40 Q42 Q47 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9902

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