Seminar in applied mathematics and statistics
SPEAKER: Lina Reichenberg (Chalmers University of Technology, Göteborg, Sweden)
TITLE: Enough Lunch for Everybody: Maintaining the Market Values of Wind and Solar at High Penetrations
ABSTRACT: An important paradox from the electricity market literature is addressed: on the one hand, many papers have shown that the market values of wind and solar decrease as their penetration increases, seeming to indicate that their integration becomes more costly; on the other hand, many studies show that high shares of wind and solar in the electricity system can be cost-effective. To resolve this paradox, we review the theory behind the relation of costs to prices in long-term equilibrium models, and clarify when the ‘zero profit rule’ holds. We show how the choice of constraints in the model affects the market prices and hence the market values of particular technologies. Forcing a penetration of a technology beyond its long-term equilibrium level depresses its market value, whereas costing emission externalities supports prices and hence the market value of low-emission generation. In several examples we show that the market values of wind and solar remain high enough to cover their costs in highly renewable scenarios for the European energy system.
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Upcoming events (after November 7):
Wednesday, November 13 at 15.15: Helene Rytgaard
Wednesday, November 20 at 15.15: Sascha Desmettre
Wednesday, November 27 at 15.15: Jesper Møller
Wednesday, November 27 at 16.15: Carl Graham
Wednesday, February 19 at 15.15: Budhi Surya