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Smoothing the curve: An estimation of the cost of demand variation and the impact of solar and wind

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  • Hill, Alexander

Abstract

Using electrification to decarbonize the energy sector potentially alters the pattern of electricity demand. This paper leverages a unique RTO-level, hourly dataset to identify the impact of exogenous changes in load on electricity supply costs. An increase in load variation of 5 % is associated with a 7.35 % increase in the cost of electricity supply. Higher solar and wind generation in a region is found to lower the cost of load variation, with solar having a more significant effect. (JEL Q41, Q49, L94).

Suggested Citation

  • Hill, Alexander, 2022. "Smoothing the curve: An estimation of the cost of demand variation and the impact of solar and wind," Resource and Energy Economics, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:resene:v:70:y:2022:i:c:s0928765522000458
    DOI: 10.1016/j.reseneeco.2022.101328
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    References listed on IDEAS

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    More about this item

    Keywords

    Demand variation; Electricity prices; Congestion pricing;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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