High renewable electricity penetration: marginal curtailment and market failure under "subsidy-free" entry

David Newbery

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Ambitious plans to decarbonise electricity will require high levels of variable renewable electricity (VRE). At high VRE penetration, the surplus that cannot be exported must be curtailed (spilled). The last MW of wind capacity will be curtailed 3+ time more hours than the average, but even in efficiently designed markets, price signals for VRE investment are given by average, not marginal, curtailment, creating a "tragedy of the commons" that requires a corrective charge to restore efficiency. The paper sets out an analytical model calibrated to Ireland in 2026, showing the source of this distortion and estimates of its magnitude.

Keywords: renewable electricity; marginal wind curtailment; integration costs; market failures; inertia charges (search for similar items in EconPapers)
JEL-codes: H23 L94 Q28 Q42 Q48 (search for similar items in EconPapers)
Date: 2023-12-29
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-reg
Note: dmgn
References: View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://www.econ.cam.ac.uk/sites/default/files/pub ... pe-pdfs/cwpe2353.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2353

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().