IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v87y2024i12d10.1007_s10640-024-00915-5.html
   My bibliography  Save this article

Environmental and Welfare Effects of Large-Scale Integration of Renewables in the Electricity Sector

Author

Listed:
  • Daniel Davi-Arderius

    (University of Barcelona
    Copenhagen Business School)

  • Tooraj Jamasb

    (Copenhagen Business School)

  • Juan Rosellon

    (University of Barcelona
    Centro de Investigación y Docencia Económicas
    German Institute for Economic Research (DIW Berlin)
    Rice University)

Abstract

The 2022 energy crisis highlighted the dependence of the Europe electricity sector on imported natural gas and the need to accelerate the adoption of renewables to the power system. However, operating a reliable power system with high share of renewables might require curtailing some renewables and activating conventional generators not scheduled in the day-ahead markets to ensure system reliability. These actions can result in environmental impacts, higher system costs and welfare impacts for customers. We use a novel high-granularity data from the Spanish power system for the period 2019–2022 to estimate the effects of these actions and forecast future impact of implementing ambitious targets of the European Gas Reduction Plan. We show that reliance on conventional generators will sharply increase with the addition of renewables. However, higher electricity consumption reduces the negative welfare impacts of integrating renewables. Until renewables and storage technologies advance further, conventional generators are needed for reliable operation of the systems.

Suggested Citation

  • Daniel Davi-Arderius & Tooraj Jamasb & Juan Rosellon, 2024. "Environmental and Welfare Effects of Large-Scale Integration of Renewables in the Electricity Sector," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(12), pages 3271-3299, December.
    • Handle: RePEc:kap:enreec:v:87:y:2024:i:12:d:10.1007_s10640-024-00915-5
    DOI: 10.1007/s10640-024-00915-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10640-024-00915-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10640-024-00915-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Simone Borghesi & Sergio Vergalli, 2022. "The European Green Deal, Energy Transition and Decarbonization," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 83(1), pages 1-3, September.
    2. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
    3. Trujillo-Baute, Elisa & del Río, Pablo & Mir-Artigues, Pere, 2018. "Analysing the impact of renewable energy regulation on retail electricity prices," Energy Policy, Elsevier, vol. 114(C), pages 153-164.
    4. Davi-Arderius, Daniel & Jamasb, Tooraj & Rosellon, Juan, 2024. "Network Operation and Constraints and the Path to Net Zero," Working Papers 8-2024, Copenhagen Business School, Department of Economics.
    5. Hirth, Lion & Glismann, Samuel, 2018. "Congestion Management: From Physics to Regulatory Instruments," EconStor Preprints 189641, ZBW - Leibniz Information Centre for Economics.
    6. Anaya, Karim L. & Pollitt, Michael G., 2020. "Reactive power procurement: A review of current trends," Applied Energy, Elsevier, vol. 270(C).
    7. Eicke, Anselm & Schittekatte, Tim, 2022. "Fighting the wrong battle? A critical assessment of arguments against nodal electricity prices in the European debate," Energy Policy, Elsevier, vol. 170(C).
    8. Oliver Ruhnau & Clemens Stiewe & Jarusch Muessel & Lion Hirth, 2023. "Natural gas savings in Germany during the 2022 energy crisis," Nature Energy, Nature, vol. 8(6), pages 621-628, June.
    9. Keele, Luke & Kelly, Nathan J., 2006. "Dynamic Models for Dynamic Theories: The Ins and Outs of Lagged Dependent Variables," Political Analysis, Cambridge University Press, vol. 14(2), pages 186-205, April.
    10. Veronika Grimm & Alexander Martin & Christian Sölch & Martin Weibelzahl & Gregor Zöttl, 2022. "Market-Based Redispatch May Result in Inefficient Dispatch," The Energy Journal, , vol. 43(5), pages 205-230, September.
    11. Paul Lehmann & Patrik Söderholm, 2018. "Can Technology-Specific Deployment Policies Be Cost-Effective? The Case of Renewable Energy Support Schemes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(2), pages 475-505, October.
    12. Rohan Best & Paul J. Burke & Frank Jotzo, 2020. "Carbon Pricing Efficacy: Cross-Country Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(1), pages 69-94, September.
    13. Poplavskaya, Ksenia & Totschnig, Gerhard & Leimgruber, Fabian & Doorman, Gerard & Etienne, Gilles & de Vries, Laurens, 2020. "Integration of day-ahead market and redispatch to increase cross-border exchanges in the European electricity market," Applied Energy, Elsevier, vol. 278(C).
    14. Davi-Arderius, Daniel & Schittekatte, Tim, 2023. "Carbon emissions impacts of operational network constraints: The case of Spain during the Covid-19 crisis," Energy Economics, Elsevier, vol. 128(C).
    15. Joos, Michael & Staffell, Iain, 2018. "Short-term integration costs of variable renewable energy: Wind curtailment and balancing in Britain and Germany," Renewable and Sustainable Energy Reviews, Elsevier, vol. 86(C), pages 45-65.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Davi-Arderius, D. & Jamasb, T. & Rosellon, J., 2024. "Renewable Integration: The Role of Market Conditions," Cambridge Working Papers in Economics 2421, Faculty of Economics, University of Cambridge.
    2. Davi-Arderius, Daniel & Jamasb, Tooraj & Rosellon, Juan, 2024. "Renewable Integration and Power System Operation: The Role of Market Conditions," Working Papers 3-2024, Copenhagen Business School, Department of Economics.
    3. Davi-Arderius, Daniel & Schittekatte, Tim, 2023. "Carbon emissions impacts of operational network constraints: The case of Spain during the Covid-19 crisis," Energy Economics, Elsevier, vol. 128(C).
    4. Berlemann, Michael & Enkelmann, Sören, 2014. "The economic determinants of U.S. presidential approval: A survey," European Journal of Political Economy, Elsevier, vol. 36(C), pages 41-54.
    5. Schönheit, David & Bruninx, Kenneth & Kenis, Michiel & Möst, Dominik, 2022. "Improved selection of critical network elements for flow-based market coupling based on congestion patterns," Applied Energy, Elsevier, vol. 306(PA).
    6. Glismann, Samuel, 2021. "Ancillary Services Acquisition Model: Considering market interactions in policy design," Applied Energy, Elsevier, vol. 304(C).
    7. Daniel Davi-Arderius & Tooraj Jamasb, 2024. "Measuring a paradox: zero-negative electricity prices," Working Papers EPRG2413, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    8. Patrick C. Meirick & Jill A. Edy, 2022. "Beyond polarization and priming: Public agenda diversity and trust in government," Social Science Quarterly, Southwestern Social Science Association, vol. 103(4), pages 934-944, July.
    9. Theo Dronne & Fabien Roques & Marcelo Saguan, 2021. "Local Flexibility Markets for Distribution Network Congestion-Management in Center-Western Europe: Which Design for Which Needs?," Energies, MDPI, vol. 14(14), pages 1-18, July.
    10. Schönheit, David & Bruninx, Kenneth & Kenis, Michiel & Möst, Dominik, 2021. "Improved selection of critical network elements for flow-based market coupling based on congestion patterns," EconStor Preprints 233467, ZBW - Leibniz Information Centre for Economics.
    11. Davi-Arderius, Daniel & Jamasb, Tooraj & Rosellon, Juan, 2024. "Network Operation and Constraints and the Path to Net Zero," Working Papers 8-2024, Copenhagen Business School, Department of Economics.
    12. Matteo Mogliani, 2010. "Residual-based tests for cointegration and multiple deterministic structural breaks: A Monte Carlo study," Working Papers halshs-00564897, HAL.
    13. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.
    14. Karim L. Anaya & Michael G. Pollitt, 2021. "How to Procure Flexibility Services within the Electricity Distribution System: Lessons from an International Review of Innovation Projects," Energies, MDPI, vol. 14(15), pages 1-26, July.
    15. Kim, Sunwoo & Choi, Yechan & Park, Joungho & Adams, Derrick & Heo, Seongmin & Lee, Jay H., 2024. "Multi-period, multi-timescale stochastic optimization model for simultaneous capacity investment and energy management decisions for hybrid Micro-Grids with green hydrogen production under uncertainty," Renewable and Sustainable Energy Reviews, Elsevier, vol. 190(PA).
    16. Antonia López Villavicencio & Josep Lluís Raymond Bara, 2006. "The short and long-run determinants of the real exchange rate in Mexico," Working Papers wpdea0606, Department of Applied Economics at Universitat Autonoma of Barcelona.
    17. Saaed, A.A.J., 2007. "Inflation and Economic Growth in Kuwait: 1985-2005. Evidence from Co-Integration and Error Correction Model," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(1).
    18. Demiralay, Sercan & Ulusoy, Veysel, 2014. "Value-at-risk Predictions of Precious Metals with Long Memory Volatility Models," MPRA Paper 53229, University Library of Munich, Germany.
    19. John Barkoulas & Christopher Baum & Mustafa Caglayan, 1999. "Fractional monetary dynamics," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1393-1400.
    20. Jan Babecký & Fabrizio Coricelli & Roman Horváth, 2009. "Assessing Inflation Persistence: Micro Evidence on an Inflation Targeting Economy," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(2), pages 102-127, June.

    More about this item

    Keywords

    Renewables; Decarbonization; Generation mix; Redispatching; Curtailment; Inverter-based resources; Synchronous generators; Day-ahead market; Network constraints; Gas crisis; System operator;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:87:y:2024:i:12:d:10.1007_s10640-024-00915-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.