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Implications of renewable electricity curtailment for delivered costs

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  • Newbery, David

Abstract

At high penetration levels, the ratio of the marginal: average curtailment of an extra MW of wind is typically 3+ times its average. For a portfolio of on- and off-shore wind and solar PV, the ratio is considerably higher. With increasing methods of using potentially surplus VRE (exports, storage) average curtailment falls but the ratio of the marginal: average curtailment rises. The marginal levelised cost of VRE is inversely proportional to the Marginal Capacity Factor, which falls as marginal curtailment increases, raising concerns that reducing average curtailment may not lower the marginal cost of VRE. This paper proves this is not the case. Reducing curtailment has a magnified effect on marginal curtailment and does indeed lower the marginal cost of VRE.

Suggested Citation

  • Newbery, David, 2025. "Implications of renewable electricity curtailment for delivered costs," Energy Economics, Elsevier, vol. 145(C).
    • Handle: RePEc:eee:eneeco:v:145:y:2025:i:c:s0140988325002968
    DOI: 10.1016/j.eneco.2025.108472
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    More about this item

    Keywords

    Variable renewable electricity; Marginal curtailment; Average curtailment; Levelised cost of electricity; VRE support design;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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