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Electricity Production with Intermittent Sources

Stefan Ambec and Claude Crampes ()

No 10-152, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: The paper analyzes the interaction between a reliable source of electricity production and intermittent sources such as wind or solar power. We first characterize the first-best dispatch and investment in the two types of energy. We put the accent on the availability of the intermittent source as a major parameter of optimal capacity investment. We then analyze decentralization through competitive market mechanisms. We show that decentralizing first best requires to price electricity contingently on wind or solar availability. By contrast, traditional meters impose a second-best uniform pricing, which distorts the optimal mix of energy sources. Decentralizing the either cross-subsidy from the intermittent source to the reliable source of energy or structural integration of the two types of technology.

JEL-codes: D24 D61 Q27 Q32 Q42 (search for similar items in EconPapers)
Date: 2010-03
New Economics Papers: this item is included in nep-ene and nep-reg
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Working Paper: Electricity Production with Intermittent Sources (2010) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:22631

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