Can Current Electricity Markets Cope with High Shares of Renewables? A Comparison of Approaches in Germany, the UK and the State of New York

Abstract

This paper looks at the empirical and theoretical background to high shares of renewables in the electricity system. First we examine what is meant by "high shares" of renewables; next we consider what we mean by electricity "markets"; then we discuss what the term "cope with" implies; before returning to the suitability of "current" electricity markets. Second, we turn to three examples of jurisdictions-Germany, the UK and the State of New York in the US-with specific aspirations for decarbonisation and the role of renewables. Each exhibits very different approaches to the way they are adjusting their electricity market design to cope with high shares of renewables. We suggest that a new wave of electricity experiments is beginning around the theme of how to incorporate large shares of intermittent renewable generation in to electricity systems.

Climate change policy discontinuity and its effects on Australia's national electricity market

“…There is no consensus about the optimal mix of policy instruments. As Pollitt and Anaya (2016) and Onifade (2016) observe, most countries pursue various combinations. At different times Australian governments have initiated all policy instruments although few in durable form (Daly & Edis, 2011;Garnaut, 2014;Jones, 2009;Nelson, 2015).…”

“…Electricity sector policy options pursued by governments in response to international climate change commitments can be catalogued into four broad streams: Renewable energy targets (RETs) levied on energy retailers (MacGill, ; Onifad, ); Carbon pricing or emissions trading schemes (ETSs) levied on generators (Freebairn, ; Garnaut, ); Government initiated contracts‐for‐differences (CfDs) funded by taxpayers or electricity consumers (Bunn & Yusupov, ; Kozlov, ; Wild, 2017); and Distributed energy resource (DER) policies, such as solar feed‐in tariffs (Nelson, Simshauser, & Kelley, , Pollitt & Anaya, ). …”

“…Distributed energy resource (DER) policies, such as solar feed‐in tariffs (Nelson, Simshauser, & Kelley, , Pollitt & Anaya, ).…”

“…Government initiated contracts-for-differences (CfDs) funded by taxpayers or electricity consumers (Bunn & Yusupov, 2015;Kozlov, 2014;Wild, 2017); and 4. Distributed energy resource (DER) policies, such as solar feed-in tariffs (Nelson, Simshauser, & Kelley, 2011, Pollitt & Anaya, 2016.…”

Innovative network pricing to support the transition to a smart grid in a low-carbon economy

“…Recent research calls for the revision of the distribution network pricing mechanism to fund these investments and the associated operation and maintenance (O&M) costs. While some of the studies focus on DER only (Pollitt and Anaya, 2016), others consider only DSR (Wilks, 2011) or look at the system-wide impacts of LEGD (Picciariello et al, 2015).…”