Forum Topics

Going negative: Price pattern estimates with high penetration renewables

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.

Relevant Publications

Electricity Pricing Problems in Future Renewables-Dominant Power Systems, 

Dharik S. Mallapragada, Cristian Junge, Cathy Wang, Hannes Pfeifenberger, Paul L. Joskow, and Richard Schmalensee, Center for Energy and Environmental Policy Research, November 2021, revised February 2022

Price Formation in New York Markets

Rana Mukerji, Future Power Markets Forum, March 2022

 

Power Market Structure & Design

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