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Marginal curtailment of wind and solar PV: transmission constraints, pricing and access regimes for efficient investment

Author

Listed:
  • Newbery, D.
  • Biggar, D.

Abstract

As Variable Renewable Energy (VRE) penetration increases in poorly networked areas with suitable VRE resources, transmission constraints will increasingly force VRE curtailment. Under most European market access and pricing arrangements, location and operation decisions are based on average curtailment rates. As the marginal contribution of the last MW of VRE is 3+ times average curtailment, there is a risk of inefficient location and operation. This article compares different pricing and access regimes (including nodal pricing that gives efficient transmission scarcity signals) to compare their impact on the incentives for VRE merchant or market driven entry.

Suggested Citation

  • Newbery, D. & Biggar, D., 2024. "Marginal curtailment of wind and solar PV: transmission constraints, pricing and access regimes for efficient investment," Cambridge Working Papers in Economics 2405, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2405
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    File URL: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe2405.pdf
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    References listed on IDEAS

    as
    1. Denholm, Paul & Brinkman, Greg & Mai, Trieu, 2018. "How low can you go? The importance of quantifying minimum generation levels for renewable integration," Energy Policy, Elsevier, vol. 115(C), pages 249-257.
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    More about this item

    Keywords

    Transmission constraints; access regimes; variable renewable electricity; marginal curtailment; nodal pricing;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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