Locational Marginal Network Tariffs for Intermittent Renewable Generation

Thomas Tangerås () and Frank A. Wolak
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Frank A. Wolak: Program on Energy and Sustainable Development and Department of Economics, Postal: Stanford University

No 1310, Working Paper Series from Research Institute of Industrial Economics

Abstract: The variability of solar and wind generation increases transmission network operating costs associated with maintaining system stability. These ancillary services costs are likely to increase as a share of total energy costs in regions with ambitious renewable energy targets. We examine how efficient deployment of intermittent renewable generation capacity across locations depends on the costs of balancing real-time system demand and supply. We then show how locational marginal network tariffs can be designed to implement the efficient outcome for intermittent renewable generation unit location decisions. We demonstrate the practical applicability of this approach by applying our theory to obtain quantitative results for the California electricity market.​

Keywords: Ancillary services costs; Efficiency; Locational marginal network tariffs; Renewable electricity generation; System stability (search for similar items in EconPapers)
JEL-codes: L94 Q20 Q42 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2019-11-29
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 (1)

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