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Real-Time Pricing and the Cost of Clean Power

Author

Listed:
  • Imelda

    (Graduate Institute of International and Development Studies (IHEID))

  • Mathias Fripp

    (University of Hawai’i at M¯anoa, University of Hawai’i Economic Research Organization and Renewable Energy and Island Sustainability group)

  • Michael J. Roberts

    (Department of Economics, University of Hawai’i Economic Research Organization, and Sea Grant College Program)

Abstract

Solar and wind power are now cheaper than fossil fuels but are intermittent. The extra supply-side variability implies growing benefits of using real-time retail pricing (RTP). We evaluate the potential gains of RTP using a model that jointly solves investment, supply, storage, and demand to obtain a chronologically detailed dynamic equilibrium for the island of Oahu, Hawai’i. We find that RTP reduces costs in high-renewable systems by roughly 6 to 12 times as much as in fossil systems holding demand assumptions fixed, markedly lowering the cost of clean energy integration.

Suggested Citation

  • Imelda & Mathias Fripp & Michael J. Roberts, 2022. "Real-Time Pricing and the Cost of Clean Power," Working Papers 2023-1R, University of Hawaii Economic Research Organization, University of Hawaii at Manoa, revised Jan 2023.
    • Handle: RePEc:hae:wpaper:2023-1r
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    File URL: https://uhero.hawaii.edu/wp-content/uploads/2023/01/UHEROwp2301R.pdf
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    Keywords

    Renewable energy; real-time pricing; storage; demand response; optimization;
    All these keywords.

    JEL classification:

    • 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
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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