Economic curtailment of intermittent renewable energy sources

Arthur Henriot

No 2014/57, RSCAS Working Papers from European University Institute

Abstract: In a power system featuring a large share of intermittent renewable energy sources (RES) and inflexible thermal generators, efficiency gains on generation costs could be achieved by curtailing the production of RES. However, as RES feature very low variable production costs, over-curtailment can be costly. In this article, we use a stylised analytical model to assess this trade-off. We show that while curtailing RES when their variability is high and the system flexibility is low can reduce generation costs, the different stakeholders (consumers, dispatchable generators, RES) will not necessarily benefit from such measures. As a consequence, generators will opt for a sub-optimal level of curtailment, and this level of curtailment should rather be set by the TSO. Either incentive to provide the TSO with accurate forecasts of RES availability, or alternatively centralised forecasting by the TSO, should then be put into place to solve the resulting problem of asymmetry of information.

Keywords: Market design; Curtailment; Large-scale renewables; Intermittency (search for similar items in EconPapers)
JEL-codes: L94 Q42 (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-ene and nep-for
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Related works:
Journal Article: Economic curtailment of intermittent renewable energy sources (2015)
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