Market Design in an Intermittent Renewable Future: Cost Recovery With Zero-Marginal-Cost Resources
Frank A. Wolak
Abstract
The basic features of an efficient short-term wholesale market design do not necessarily need to change to accommodate a significantly larger share of zero-marginal-cost, intermittent renewable energy from wind and solar resources. A large share of controllable zero-marginal-cost generation does not create any additional market design challenge relative to a market with a large share of controllable positive marginal cost generation. Regardless of the technology, generation unit owners must recover their fixed costs from sales of energy, ancillary services, and long-term resource adequacy products.
Topics & Concepts
Marginal costRenewable energyWind powerEnvironmental economicsElectricity generationMarginal profitRenewable resourceResource (disambiguation)Market shareUnit costBusinessNatural resource economicsIndustrial organizationEconomicsMicroeconomicsComputer scienceEngineeringMarketingPower (physics)Quantum mechanicsPhysicsComputer networkElectrical engineeringElectric Power System OptimizationSmart Grid Energy ManagementIntegrated Energy Systems Optimization