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Can current electricity markets cope with high shares of renewables? A comparison of approaches in Germany, the UK and the State of New York

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  • Michael G. Pollitt
  • Karim L. Anaya

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.

Suggested Citation

  • Michael G. Pollitt & Karim L. Anaya, 2015. "Can current electricity markets cope with high shares of renewables? A comparison of approaches in Germany, the UK and the State of New York," Cambridge Working Papers in Economics 1531, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1531
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    References listed on IDEAS

    as
    1. Parail, V., 2010. "Properties of Electricity Prices and the Drivers of Interconnector Revenue," Cambridge Working Papers in Economics 1059, Faculty of Economics, University of Cambridge.
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    More about this item

    Keywords

    renewables; electricity markets; Germany; UK; New York;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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