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...

Levelized costs of electricity (LCOE) are a common metric for comparing power generating technologies. However, there is qualified criticism particularly towards evaluating variable renewables like wind and solar power based on LCOE because it ignores integration costs that occur at the system...

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...

Energy and climate policies are usually seen as measures to internalize externalities. However, as a side effect, these policies redistribute wealth between consumers and producers, and within these groups. While redistribution is seldom the focus of the academic literature in energy economics,...

This paper proposes a game-theoretic model to analyze the strategic behavior of inc-dec gaming in market-based congestion management (redispatch). We extend existing models by considering incomplete information about competitors’ costs and a finite set of providers. We find that these...

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...

The economics of electricity is shaped by its physics. A well known example is the non-storability of electricity that causes its price to fluctuate widely. More generally, physical constraints cause electricity to be a heterogeneous good along three dimensions - time, space, and lead-time....

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...