Optimal and Equilibrium Investment in the Intermittent Generation Technologies

Abstract

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Decarbonizing Electricity Generation with Intermittent Sources of Energy

“…See alsoRouillon (2015) andBaranes et al (2017) for similar analysis. 9 In the same vein, two studies have identified the social the value of making consumers reactive to real-time electricity prices: Léautier (2014) with variable demand andAmbec and Crampes (2017) with variable supply (i.e.…”

Intermittent Electric Generation Technologies and Smart Meters: Substitutes or Complements

“…This article takes a different direction, by using a stylized microeconomic framework to derive general insights regarding the optimal development of inter-mittent technologies to generate electricity and smart meters. The corresponding strand of literature is much less developed, including Ambec and Crampes (2012), Bode (2006), Borenstein and Holland (2005), Green and Vasilakos (2010), Joskow and Tirole (2007), Léautier (2014), Rouillon (2015), and Twoney and Neuhoff (2009). For the sake of our presentation, these papers are divided below in two subsets, by distinguishing between those that focus on the supply size of the market and on the competition between conventional and renewable technologies, and those that focus on the demand side of the market and on the organizational features that can be used to make the consumers more reactive to the situation of the spot market.…”

“…Moreover, Twoney and Neuhoff (2009) find that the difference can be exarcebated in the presence of market power. Ambec and Crampes (2012) and Rouillon (2015) go one step further, by making the energy mix endogenous through the possibility of investing in new generating capacities. Ambec and Crampes (2012) characterize the optimal investment and dispatch between conventional and intermittent generators and discuss its implementability under perfect competition.…”

“…They consider in turn two polar situations, one where all consumers face prices contingent on the availability of the intermittent source of electricity (first-best optimum) and another where they all face a uniform price (second-best optimum). Rouillon (2015) complements Ambec and Crampes (2012), by assuming that both types of consumers co-exist on the market and by dealing with perfect and monopolistic competitions. Under perfect competition, it is shown that the (second-best) optimal policy is implementable, provided that the conventional and intermittent generators exchange their electric production on a wholesale spot market.…”

“…To the best of our knowledge, this article is the first attempt to bring together, in a stylized microeconomic framework, the two issues of the optimal development of intermittent capacities and smart meters just surveyed above. The closest papers are Rouillon (2015) and Léautier (2014). The reason why it is interesting to deal with both issues in the same setting is because it allows to emphasize the important role played by the correlation between demand and intermittent supply.…”