Managing intermittency in the electricity market

Jean-Henry Ferrasse (), Nandeeta Neerunjun and Hubert Stahn
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Jean-Henry Ferrasse: Aix-Marseille Univ, CNRS, M2P2, Marseille, France, http://www.m2p2.fr/annuaire-304/jean-henry-ferrasse-131.htm

No 2114, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: We analyze the integration of intermittent renewables-based technologies into an electricity mix comprising of conventional energy. Intermittency is modeled by a contingent electricity market and we introduce demand-side flexibility through the retailing structure. Retailers propose diversified electricity contracts at different prices allowing consumers to choose their optimal electricity consumption. These contracts are modeled by a set of state-contingent electricity delivery contracts. We show existence and uniqueness of a competitive equilibrium of the contingent wholesale and retail markets. We provide a welfare analysis and only obtain constraint efficiency due to a limited number of delivery contracts. Finally, we discuss the conditions under which changing the set of delivery contracts improves penetration of renewables and increases welfare. This provides useful policy insights for managing intermittency and achieving renewable capacity objectives.

Keywords: electricity market; renewables; intermittency; demand exibility (search for similar items in EconPapers)
JEL-codes: D61 G13 Q41 Q42 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2021-03
New Economics Papers: this item is included in nep-cta, nep-ene and nep-reg
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Working Paper: Managing intermittency in the electricity market (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:2114

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