Intermittency and electricity retailing: An incomplete market approach

Jean-Henry Ferrasse, Nandeeta Neerunjun () and Hubert Stahn
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Jean-Henry Ferrasse: M2P2 - Laboratoire de Mécanique, Modélisation et Procédés Propres - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique
Nandeeta Neerunjun: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, M2P2 - Laboratoire de Mécanique, Modélisation et Procédés Propres - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique
Hubert Stahn: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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Abstract: We analyze the integration of intermittent renewables-based technologies into an electricity mix comprising of conventional energy. Intermittency is modeled by a contingent electricity market and we introduce demand-side flexibility through the retailing structure. Retailers propose diversified electricity contracts at different prices, but in an insufficient number to cover intermittent production. These delivery contracts are modeled similarly to numeraire assets. We study the competitive equilibrium of the state-contingent wholesale electricity markets and the delivery contract markets. We also provide an analysis linking the delivery contracts to social welfare. Finally, we discuss the conditions under which changing the delivery contracts improve penetration of renewables and increases welfare. These provide useful insights for managing intermittency and achieving renewable capacity objectives.

Keywords: Electricity markets; Renewables; Intermittency; Incomplete markets (search for similar items in EconPapers)
Date: 2022-11
New Economics Papers: this item is included in nep-ene and nep-reg
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Published in Mathematical Social Sciences, 2022, 120, pp.24-36. ⟨10.1016/j.mathsocsci.2022.09.001⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03979827

DOI: 10.1016/j.mathsocsci.2022.09.001

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