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Intermittent Electric Generation Technologies and Smart Meters: Substitutes or Complements

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  • Fadoua Chiba
  • Sébastien Rouillon

Abstract

We model a simplified electric market with producers using either conventional or intermittent electric generators and consumers equipped with either smart meter with real-time pricing or traditional meters with a flat tariff. We calculate the investment in intermittent technologies and smart meters in a social optimum. We find that the optimal penetration of smart meters is increasing in the volatility of the electric spot price. As a consequence, intermittent capacities and smart-meters are complement, only if the correlation existing between intermittent energy and demand is negative or if the capacity of intermittent generators is large enough. Otherwise, larger intermittent capacities actually help to decrease the volatility of the electric spot price, making smart-meters less useful. We also give a numeral application, calibrated to represent the French electric market in 2018 and policy objective for 2030. JEL classification: D24, D41, Q41, L11

Suggested Citation

  • Fadoua Chiba & Sébastien Rouillon, 2020. "Intermittent Electric Generation Technologies and Smart Meters: Substitutes or Complements," Revue d'économie politique, Dalloz, vol. 130(4), pages 573-613.
    • Handle: RePEc:cai:repdal:redp_304_0069
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    Cited by:

    1. Nandeeta Neerunjun, 2022. "Emissions pricing instruments with intermittent renewables: second-best policy," AMSE Working Papers 2215, Aix-Marseille School of Economics, France.
    2. Nandeeta Neerunjun, 2022. "Emissions pricing instruments with intermittent renewables: second-best policy," Working Papers hal-03740013, HAL.

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    More about this item

    Keywords

    Capacity choice; electricity; intermittency; renewable energy;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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