11The value of day-ahead solar power forecasting improvements was analyzed by simulating the 12 operation of the Independent System Operator -New England (ISO-NE) power system under a 13 range of scenarios with varying solar power penetrations and solar power forecasting 14 improvements. The results showed how the integration of solar power decreased operational 15 electricity generation costs, by decreasing fuel and variable operation and maintenance costs, 16 while decreasing start and shutdown costs of fossil fueled conventional generators. Solar power 17forecasting improvements changed the impacts that the uncertainty of solar power has on bulk 18 power system operations; electricity generation from the fast start and lower efficiency power 19 plants, ramping of all generators, start and shutdown costs, and solar power curtailment were all 20 reduced. These impacts led to a reduction in overall operational electricity generation costs in the 21 system that translates into an annual economic value for improving solar power forecasting. 22 23 24 33 There is a growing need for solar power forecasting, especially for power systems in which solar 34 power represents a significant share of the electricity generation mix. Several balancing 35 authorities already use solar power forecasting technologies in their daily operations, including 36
Climate change mitigation requires governmental intervention, but different choices are at hand. While economists in general advocate for first-best instruments, reality looks quite different, with especially many subsidy schemes for renewable energies being used. Supporters of these schemes often argue that investment risk reduction is essential to achieve ambitious environmental targets. In this paper we compare four different instruments (cap, tax, minimum quota and feedin tariffs/renewable auctions) in terms of efficacy and efficiency and also quantify investment risks, assuming an uncertain investment environment, represented by different information shocks on demand, investment and fuel cost. We use a long-term electricity market equilibrium model (generalized peak load pricing model) of the future German electricity market implemented as a linear optimization problem. Starting from an equilibrium, single input parameters are varied to simulate the arrival of new information. Running the model again with partly fixed capacities then allows us to analyze the adjustment of the power plant portfolio towards the new equilibrium over time. As expected quantity-based instruments are effective in assuring achievement of quantitative goals, notably a certain emission level. Yet risks for investors are rather high in that furthermore that first-best instruments are the most efficient. Risks are lower with price solutions, especially feed-in tariffs or renewable auctions provide the possibility to limit risks extremely by diversification only inside the electricity market.
Climate change mitigation requires governmental intervention, but different choices are at hand. While economists in general advocate for first-best instruments, reality looks quite different, with especially many subsidy schemes for renewable energies being used. Supporters of these schemes often argue that investment risk reduction is essential to achieve ambitious environmental targets. In this paper we compare four different instruments (cap, tax, minimum quota and feedin tariffs/renewable auctions) in terms of efficacy and efficiency and also quantify investment risks, assuming an uncertain investment environment, represented by different information shocks on demand, investment and fuel cost. We use a long-term electricity market equilibrium model (generalized peak load pricing model) of the future German electricity market implemented as a linear optimization problem. Starting from an equilibrium, single input parameters are varied to simulate the arrival of new information. Running the model again with partly fixed capacities then allows us to analyze the adjustment of the power plant portfolio towards the new equilibrium over time. As expected quantity-based instruments are effective in assuring achievement of quantitative goals, notably a certain emission level. Yet risks for investors are rather high in that furthermore that first-best instruments are the most efficient. Risks are lower with price solutions, especially feed-in tariffs or renewable auctions provide the possibility to limit risks extremely by diversification only inside the electricity market.
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