Electricity is primarily bid into markets and dispatched based on the generator’s locational marginal cost – a combination of transmission costs, operational costs, and fuel costs. The latter is usually the largest factor for fossil generators, but there is no fuel cost for wind and solar generators.
As renewables increase their share of electricity generation, real-time electricity price patterns will change. The exact price impact will be based on transmission system build-out, and the parallel growth of energy storage, demand response, and other emerging resources and technologies.
Presentations and papers on this topic explore a renewable-energy system’s potential price formation impacts.