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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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    References listed on IDEAS

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    1. Newbery, David M. & Biggar, Darryl R., 2024. "Marginal curtailment of wind and solar PV: Transmission constraints, pricing and access regimes for efficient investment," Energy Policy, Elsevier, vol. 191(C).
    2. Simshauser, Paul & Newbery, David, 2024. "Non-firm vs priority access: On the long run average and marginal costs of renewables in Australia," Energy Economics, Elsevier, vol. 136(C).
    3. Newbery, D. & Biggar, D., 2024. "Marginal curtailment of wind and solar PV: transmission constraints, pricing and access regimes for efficient investment," Cambridge Working Papers in Economics 2405, Faculty of Economics, University of Cambridge.
    4. David Newbery & Darryl Biggar, 2024. "Marginal curtailment of wind and solar PV: transmission constraints, pricing and access regimes for efficient investment," Working Papers EPRG2401, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. David Newbery & Chi Kong Chyong, 2025. "Marginal curtailment and the efficient cost of clean power," Working Papers EPRG2505, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    6. Malte Jansen & Iain Staffell & Lena Kitzing & Sylvain Quoilin & Edwin Wiggelinkhuizen & Bernard Bulder & Iegor Riepin & Felix Müsgens, 2020. "Offshore wind competitiveness in mature markets without subsidy," Nature Energy, Nature, vol. 5(8), pages 614-622, August.
    7. Newbery, D. & Chyong, C. K, 2025. "Marginal Curtailment and the Efficient Cost of Clean Power," Cambridge Working Papers in Economics 2526, Faculty of Economics, University of Cambridge.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    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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