European electricity markets are geographically organized in zones, which often resemble countries. Overload of power lines within zones have to be relieved through other means than the electricity market, e.g. so-called “redispatching” of power plants. Traditionally, this has often been...

European wholesale electricity prices have dropped by nearly two thirds since their all-time high around 2008. Different factors have been blamed, or praised, for causing the price slump: the expansion of renewable energy; the near-collapse of the European emission trading scheme; over-optimistic...

Balancing power (regulating power, control power) is used to quickly restore the supply-demand balance in power systems. Variable renewable energy sources (VRE) such as wind and solar power, being stochastic in nature, ceteris paribus increase the need for short-term balancing. Their impact on...

The integration of wind and solar generators into power systems causes “integration costs” for grids, balancing services, reserve capacity, more flexible operation of thermal plants, and reduced utilization of the capital stock embodied in infrastructure. This paper proposes a valuation...

The integration of wind and solar generators into power systems cause “integration costs” for grids, balancing services, reserve capacity, reduced utilization of the capital stock, and more flexible operation of thermal plants. This paper proposes a market-based valuation framework to...

In order to explore scenarios on the future of power systems, a variety of numerical models have been developed. As the share of variable renewable energy sources, particularly wind and solar, is projected to significantly increase, accounting for their temporal and spatial variability becomes...

Several studies have shown that the revenues of wind and solar power generators on spot markets (“market value”) decline with increasing deployment. This “value drop” is often discussed quantitatively but infrequently analytically, a gap that this paper aims to fill. We derive a formal...

Previous studies have noted that, surprisingly, Germany’s dramatic expansion of wind and solar energy coincided with a reduction of short-term balancing reserves. This paper provides further and updated evidence, supporting this “German Balancing Paradox”: since 2011 wind and solar energy...

The inherent variability of wind speeds affects the price the wind power generators receive when selling their output on the market (market value). During windy times the additional supply of electricity at zero marginal costs shifts the supply curve (merit-order curve) to the right and thereby...

The variability of wind and solar power crucially affects their social value. This paper determines the welfare-optimal market share of wind and solar power under different technology, price, and policy assumptions, focussing on the impact of variability. A numerical electricity market model...