Pros and cons of exposing renewables to electricity market risks—A comparison of the market integration approaches in Germany, Spain, and the UK

Kleßmann, Corinna; Nabe, Christian; Burges, K.

doi:10.1016/j.enpol.2008.06.022

Cited by 213 publications

(133 citation statements)

References 6 publications

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“…Offshore wind has the potential to grow rapidly in the EU. It accounted for 8% of new wind installed capacity in 2016 [54], driven by European and national policy targets towards carbonization [55,56]. A similar potential for growth exists in the case of CSP in North Africa.…”

Section: Methodsmentioning

confidence: 99%

Do We Need Gas as a Bridging Fuel? A Case Study of the Electricity System of Switzerland

2017

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Many future electricity scenarios, including those from the International Energy Agency, use natural gas to bridge the transition to renewables, in particular as a means of balancing intermittent generation from new renewables. Given that such strategies may be inconsistent with strategies to limit climate change to below 2 • C, we address the question of whether such use of gas is necessary or cost effective. We conduct a techno-economic case study of Switzerland, using a cost optimization model. We explore a range of electricity costs, comparing scenarios in which gas is used as a source of base-load power, a source of balancing capacity, and not used at all. Costs at the high end of the range show that a complete decarbonization increases system-wide costs by 3% compared to a gas bridging scenario, and 13-46% compared to a carbon-intensive scenario, depending on the relative shares of solar and wind. Costs at the low end of the range show that system-wide costs are equal or lower for both completely decarbonized and gas bridging scenarios. In conclusion, gas delivers little to no cost savings as a bridging fuel in a system that switches to wind and solar.

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Section: Methodsmentioning

confidence: 99%

Do We Need Gas as a Bridging Fuel? A Case Study of the Electricity System of Switzerland

2017

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“…It is not surprising that each method of power generation has its pros and cons (Klessmann et al, 2008). From an economic point of view, the upfront cost of RE implementation, development, and delivery is extremely high (Menanteau et al, 2003;Burgholzer, & Auer, 2016).…”

Section: Methodsmentioning

confidence: 99%

The Future Cost And The Key Factors Of Energy Generation

Mitchell¹,

Maksimova²,

Bay³

2017

European Proceedings of Social and Behavioural Sciences

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This article explores and analyses several factors that are interconnected and affect the cost of alternative sources of energy, such as wind, solar PV, hydro and kinetic energy, and compares them to current fossil fuels such as nuclear, coal and natural gas that provide 85% of the total residential and industrial energy consumption worldwide. In addition, we provide a forecast of the levelized energy cost (LEC) until parity of alternative sources of energy that is directly correlated to the multiple factors seen and analyze such as: government tax breaks and subsidies, weather conditions, market conditions, technological advancements, fuel prices and economic conditions between other with their defining role and their related impact in the price of energy. Moreover, we analyzed the consumers' role and the possibilities of creating mini-grids and smart home systems that will increase savings in the short and long run and how will they co-exist with currently utility energy providers.

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“…Meanwhile, plant operators only receive the market premium for the amount of electricity they actually sell; in the absence of storage options, electricity production is therefore profitable as long as the market price is higher than the plant's marginal costs minus the amount of the gross market premium which the producer expects to receive (Andor et al 2010;Klessmann et al 2008;cf. tab.…”

Section: Impacts On System Integration (Incentives For Changing Produmentioning

confidence: 99%

Promoting the market and system integration of renewable energies through premium schemes—A case study of the German market premium

Gawel

Purkus

2013

Energy Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in UFZ Discussion Papers Department of Economics 4/2013 Promoting the Market and System Integration of Renewable Energies through Premium Schemes -A Case Study of the German Market PremiumErik Gawel, Alexandra Purkus January 20131 Promoting the Market and System Integration of Renewable Energies through Premium Schemes -A Case Study of the German Market PremiumErik Gawel 1 , Alexandra Purkus Abstract: With the share of renewable energies within the electricity sector rising, improving their market (i.e. inclusion in the allocative processes of the electricity market) and system integration (i.e. enhanced responsibility for grid stability) is of increasing importance. To transform the energy system efficiently while ensuring security of supply, it is necessary to increase the alignment of renewable electricity production with short-and long-term market signals. By offering plant operators a premium on top of the electricity market price, premium schemes represent a potential option for achieving this, and have been implemented by several EU member states. This paper focuses on the case study of the German market premium scheme, which has been adopted as part of the 2012 amendment of the Renewable Energy Sources Act. Building on an evaluation of early experiences, we discuss whether the market premium in its current design improves market and/or system integration, and if it seems suitable in principle to contribute to these aims (effectiveness). Also, potential efficiency gains and additional costs of "administering integration" are discussed (efficiency). While market integration in a narrow sense (i.e. exposing renewables to price risks) is not the purpose of the German premium scheme, it has successfully increased participation in direct marketing. However, windfall profits are high, and the benefits of gradually leading plant operators towards the market are questionable. Incentives for demand-oriented electricity production are established, but they prove insufficient particularly in the case of intermittent renewable energy sources. It seems therefore unlikely that the German market premium scheme in its current form can significantly improve the market and system integration of renewable energies. To conclude, we provide an outlook on alternative designs of premium schemes, and discuss whether they seem better suited for addressing the challenges ahead.

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Pros and cons of exposing renewables to electricity market risks—A comparison of the market integration approaches in Germany, Spain, and the UK

Cited by 213 publications

References 6 publications

Do We Need Gas as a Bridging Fuel? A Case Study of the Electricity System of Switzerland

Do We Need Gas as a Bridging Fuel? A Case Study of the Electricity System of Switzerland

The Future Cost And The Key Factors Of Energy Generation

Promoting the market and system integration of renewable energies through premium schemes—A case study of the German market premium

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