Real-Time Pricing and the Cost of Clean Power

Imelda Imelda, Matthias Fripp and Michael Roberts

American Economic Journal: Economic Policy, 2024, vol. 16, issue 4, 100-141

Abstract: Solar and wind power are now cheaper than fossil fuels but are intermittent. The extra supply-side variability implies growing benefits of using real-time retail pricing (RTP). We evaluate the potential gains of RTP using a model that jointly solves investment, supply, storage, and demand to obtain a chronologically detailed dynamic equilibrium for the island of Oahu, Hawai'i. We find that, holding demand assumptions fixed, RTP reduces costs in high-renewable systems by roughly 6 to 12 times as much as in fossil systems, markedly lowering the cost of clean energy integration.

JEL-codes: G31 L94 L98 Q42 Q48 (search for similar items in EconPapers)
Date: 2024
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Related works:
Working Paper: Real-Time Pricing and the Cost of Clean Power (2023)
Working Paper: Real-Time Pricing and the Cost of Clean Power (2022)
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DOI: 10.1257/pol.20220506

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