Intermittency or Uncertainty? Impacts of Renewable Energy in Electricity Markets

60 Pages Posted: 8 Sep 2022

See all articles by Paige Weber

Paige Weber

University of North Carolina (UNC) at Chapel Hill

Matt Woerman

Colorado State University, Fort Collins

Date Written: 2022

Abstract

Renewable energy resources possess unique characteristics—intermittency and uncertainty— that pose challenges to electricity grid operations. We study these characteristics and find that uncertainty, represented by wind forecast error, has larger grid impacts than intermittency, or hourly generation changes. Uncertainty yields roughly double the price effects and roughly double the number of conventional generator start-ups, as compared to perfectly forecast wind. While this finding is important given the persistence of wind forecast error over the study period, reducing wind forecast error to the level of demand forecast error would lower costs by a modest half a million dollars per year.

Keywords: renewable energy, electricity prices and price dispersion, electricity grid management

JEL Classification: Q400, Q420, Q470

Suggested Citation

Weber, Paige and Woerman, Matt, Intermittency or Uncertainty? Impacts of Renewable Energy in Electricity Markets (2022). CESifo Working Paper No. 9902, Available at SSRN: https://ssrn.com/abstract=4212066 or http://dx.doi.org/10.2139/ssrn.4212066

Paige Weber (Contact Author)

University of North Carolina (UNC) at Chapel Hill ( email )

Chapel Hill, NC 27599
United States

Matt Woerman

Colorado State University, Fort Collins ( email )

Fort Collins, CO 80523
CO 80523
United States

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