Economic Value of Intermittent Power Generation

Abstract

A significant part of the renewable energy differs from conventional generating technologies such that they produce electricity intermittently. If traditional levelized cost approach is used it gives inappropriate and misleading results. We utilize a long-run oriented Real-Time Price based model to analyze the economic value of intermittent electricity generation. We study the impacts of a change in production profile and increase in the share of intermittent generation to the market prices, equilibrium of other capacities, production costs, profits and CO2 emissions. Our approach which uses hourly output profiles and associated market value of electricity, gives plausible economic values for electricity.

Keywords: Intermittent generation, Economic value, Emission reductions

JEL Classification: L11, Q41, Q21