 Operating reserve demand curve, scarcity pricing and intermittent generation: Lessons from the Texas ERCOT experienceEnergy Policy, 2021, vol. 149, issue C Abstract: Resolving the resource adequacy problem has been usually entrusted to the imposition of some kind of long-term capacity requirements or to forward markets. The Operating Reserve Demand Curve (ORDC), which is linked to short-term market conditions and does not require central planning, has been presented as an alternative system with which to ensure long-term resource adequacy in the market. Using hourly data from the Texas ERCOT market between January 2015 and February 2019, we empirically show that ORDC prices are significantly negatively affected by wind generation. We find that, if wind generation is relatively low, a 1% increase in wind generation decreases the ORDC price by around 0.15–0.1%. This fact may preclude the ORDC from providing long-term price signals and price stability to generators. Moreover, we also find that if wind generation is greater than 9000 MW, the ORDC price is expected to be zero, which may further disincentive to increase generation capacity –especially dispatchable capacity that may be needed as a backup if the wind is not blowing. Keywords: Operating reserves; Resource adequacy; Scarcity pricing; Energy-only markets; Intermittency; Renewable energy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:149:y:2021:i:c:s0301421520307680 DOI: 10.1016/j.enpol.2020.112057 Access Statistics for this article Energy Policy is currently edited by N. France More articles in Energy Policy from Elsevier |
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