Impact of High Variable Renewable Generation on Future Market Prices and Generator Revenue
Date Published: November 2015
Authors: Peerapat Vithayasrichareonan, Jenny Riesz, Ian MacGill
This paper examines the impact of high renewable penetrations on spot electricity prices, generator revenues and profits. The paper also explores market mechanisms to ensure resource adequacy and long-term reliability in energy-only markets. The model used in the paper is a probabilistic generation portfolio modeling tool, assuming that the current reliability standard is maintained and participants deploy short-run marginal cost bidding. Six different renewable penetration scenarios with different energy shares are considered. The model suggests that the energy-only market can work to maintain revenue sufficiency and long-term resource adequacy as long as the market price cap is high enough to provide a long-term incentive to attract and retain needed supply.