Implications of Renewable Electricity Curtailment for Delivered Costs

David Newbery

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

Abstract: At high penetration levels, the ratio of the marginal: average curtailment (mc/ac) of an extra MW of wind is typically 3+ times its average. For a portfolio of on- and off-shore wind and solar PV, the ratio is considerably higher. With increasing methods of using potentially surplus VRE (exports, storage) average curtailment falls but the mc/ac ratio rises. The marginal levelised cost of VRE is inversely proportional to the Marginal Capacity Factor, which falls as marginal curtailment increases, raising concerns that reducing average curtailment may not lower the marginal cost of VRE. This paper proves this is not the case. Reducing curtailment has a magnified effect on marginal curtailment and does indeed lower the marginal cost of VRE.

Keywords: Variable Renewable Electricity; Marginal Curtailment; Average Curtailment; Levelised Cost of Electricity; VRE Support Design (search for similar items in EconPapers)
JEL-codes: L94 Q42 Q48 (search for similar items in EconPapers)
Date: 2025-02-18
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2511

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