The environmental value of an owned agile power source

Sriram Sankaranarayanan, Felipe Feijoo and Saral Mukherjee

Energy, 2025, vol. 334, issue C

Abstract: As power systems transition towards low-carbon generation, the reliance on variable renewable energy sources introduces uncertainty in supply. To maintain reliability, flexible technologies capable of rapid ramp-up, referred to as agile technologies, are increasingly important. This study explores the economic and environmental implications of integrating such technologies into the portfolio of a profit-maximising renewable energy producer. A stylised model in which the producer commits to a supply contract before observing renewable output is developed. After production is realised, any supply shortfall is covered using agile technology or procured from expensive short-term markets. However, while agile technologies offer operational flexibility, they may be associated with significant greenhouse gas emissions, particularly when life-cycle impacts from material extraction or disposal are considered. Using a range of realistic scenarios, the results show that the expected total emissions could be smaller if the focal producer owns a smartly chosen portfolio of renewable and agile technology compared to when they own no agile technology. More importantly, it is shown that, even if such an agile technology has a higher emission rate than every other plant in the system, it could still be environmentally prudent for a renewable producer to own that agile technology. The findings suggest that renewable-agile portfolios can offer both economic and environmental gains, encouraging policymakers to adopt this approach even when LCA or some level of direct emissions exist.

Keywords: Renewable power plants; Production agility; GHG emission (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:334:y:2025:i:c:s0360544225030890

DOI: 10.1016/j.energy.2025.137447

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