IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v162y2018icp148-157.html
   My bibliography  Save this article

The electricity market in a renewable energy system

Author

Listed:
  • Djørup, Søren
  • Thellufsen, Jakob Zinck
  • Sorknæs, Peter

Abstract

The transition to a 100% renewable energy system based on variable renewable energy raises technical but also institutional questions. The smart energy system concept integrates variable renewable energy by addressing the technical challenges through the integration of different energy sectors, but integration of variable renewable energy also entails a change in the cost structures, especially related to electricity. The effect of this change in cost structures on market prices is investigated. This is done through simulation of a 100% renewable energy system that utilises a large degree of cross-sector integration but maintaining the current electricity market structure. The paper uses a 100% renewable energy system scenario for a 2050 Danish energy system. This is reflected in the use of wind energy as the primary renewable energy source. It is concluded that the current electricity market structure is not able to financially sustain the amounts of wind power necessary for the transition to a 100% renewable energy system. Since earlier research shows that neither electricity production costs nor the total system costs is higher for the renewable path than the fossil-based alternatives, the conclusion in this paper points towards a need for reshaping the institutional structure of electricity trade.

Suggested Citation

  • Djørup, Søren & Thellufsen, Jakob Zinck & Sorknæs, Peter, 2018. "The electricity market in a renewable energy system," Energy, Elsevier, vol. 162(C), pages 148-157.
  • Handle: RePEc:eee:energy:v:162:y:2018:i:c:p:148-157
    DOI: 10.1016/j.energy.2018.07.100
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544218313975
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.energy.2018.07.100?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hagos, Dejene Assefa & Gebremedhin, Alemayehu & Zethraeus, Björn, 2014. "Towards a flexible energy system – A case study for Inland Norway," Applied Energy, Elsevier, vol. 130(C), pages 41-50.
    2. Lund, Rasmus & Mathiesen, Brian Vad, 2015. "Large combined heat and power plants in sustainable energy systems," Applied Energy, Elsevier, vol. 142(C), pages 389-395.
    3. Thellufsen, Jakob Zinck & Lund, Henrik, 2016. "Roles of local and national energy systems in the integration of renewable energy," Applied Energy, Elsevier, vol. 183(C), pages 419-429.
    4. Thellufsen, Jakob Zinck & Lund, Henrik, 2017. "Cross-border versus cross-sector interconnectivity in renewable energy systems," Energy, Elsevier, vol. 124(C), pages 492-501.
    5. Connolly, D. & Lund, H. & Mathiesen, B.V., 2016. "Smart Energy Europe: The technical and economic impact of one potential 100% renewable energy scenario for the European Union," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 1634-1653.
    6. Cludius, Johanna & Hermann, Hauke & Matthes, Felix Chr. & Graichen, Verena, 2014. "The merit order effect of wind and photovoltaic electricity generation in Germany 2008–2016: Estimation and distributional implications," Energy Economics, Elsevier, vol. 44(C), pages 302-313.
    7. Cerovac, Tin & Ćosić, Boris & Pukšec, Tomislav & Duić, Neven, 2014. "Wind energy integration into future energy systems based on conventional plants – The case study of Croatia," Applied Energy, Elsevier, vol. 135(C), pages 643-655.
    8. Hvelplund, Frede & Østergaard, Poul Alberg & Meyer, Niels I., 2017. "Incentives and barriers for wind power expansion and system integration in Denmark," Energy Policy, Elsevier, vol. 107(C), pages 573-584.
    9. Lund, Henrik & Kempton, Willett, 2008. "Integration of renewable energy into the transport and electricity sectors through V2G," Energy Policy, Elsevier, vol. 36(9), pages 3578-3587, September.
    10. Rodríguez, Rolando A. & Becker, Sarah & Andresen, Gorm B. & Heide, Dominik & Greiner, Martin, 2014. "Transmission needs across a fully renewable European power system," Renewable Energy, Elsevier, vol. 63(C), pages 467-476.
    11. Lund, Henrik & Andersen, Anders N. & Østergaard, Poul Alberg & Mathiesen, Brian Vad & Connolly, David, 2012. "From electricity smart grids to smart energy systems – A market operation based approach and understanding," Energy, Elsevier, vol. 42(1), pages 96-102.
    12. Lund, Henrik & Østergaard, Poul Alberg & Connolly, David & Mathiesen, Brian Vad, 2017. "Smart energy and smart energy systems," Energy, Elsevier, vol. 137(C), pages 556-565.
    13. Lund, Henrik, 2005. "Large-scale integration of wind power into different energy systems," Energy, Elsevier, vol. 30(13), pages 2402-2412.
    14. Mathiesen, Brian Vad & Lund, Henrik & Karlsson, Kenneth, 2011. "100% Renewable energy systems, climate mitigation and economic growth," Applied Energy, Elsevier, vol. 88(2), pages 488-501, February.
    15. Connolly, D. & Lund, H. & Mathiesen, B.V. & Leahy, M., 2011. "The first step towards a 100% renewable energy-system for Ireland," Applied Energy, Elsevier, vol. 88(2), pages 502-507, February.
    16. Woo, C.K. & Moore, J. & Schneiderman, B. & Ho, T. & Olson, A. & Alagappan, L. & Chawla, K. & Toyama, N. & Zarnikau, J., 2016. "Merit-order effects of renewable energy and price divergence in California’s day-ahead and real-time electricity markets," Energy Policy, Elsevier, vol. 92(C), pages 299-312.
    17. Frede Hvelplund & Søren Djørup, 2017. "Multilevel policies for radical transition: Governance for a 100% renewable energy system," Environment and Planning C, , vol. 35(7), pages 1218-1241, November.
    18. Xiong, Weiming & Wang, Yu & Mathiesen, Brian Vad & Lund, Henrik & Zhang, Xiliang, 2015. "Heat roadmap China: New heat strategy to reduce energy consumption towards 2030," Energy, Elsevier, vol. 81(C), pages 274-285.
    19. Lund, Peter D. & Lindgren, Juuso & Mikkola, Jani & Salpakari, Jyri, 2015. "Review of energy system flexibility measures to enable high levels of variable renewable electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 785-807.
    20. Sensfuß, Frank & Ragwitz, Mario & Genoese, Massimo, 2008. "The merit-order effect: A detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany," Energy Policy, Elsevier, vol. 36(8), pages 3076-3084, August.
    21. Lund, H. & Mathiesen, B.V., 2009. "Energy system analysis of 100% renewable energy systems—The case of Denmark in years 2030 and 2050," Energy, Elsevier, vol. 34(5), pages 524-531.
    22. Connolly, D. & Lund, H. & Mathiesen, B.V. & Werner, S. & Möller, B. & Persson, U. & Boermans, T. & Trier, D. & Østergaard, P.A. & Nielsen, S., 2014. "Heat Roadmap Europe: Combining district heating with heat savings to decarbonise the EU energy system," Energy Policy, Elsevier, vol. 65(C), pages 475-489.
    23. Alberg Østergaard, Poul & Mathiesen, Brian Vad & Möller, Bernd & Lund, Henrik, 2010. "A renewable energy scenario for Aalborg Municipality based on low-temperature geothermal heat, wind power and biomass," Energy, Elsevier, vol. 35(12), pages 4892-4901.
    24. Hedegaard, Karsten & Mathiesen, Brian Vad & Lund, Henrik & Heiselberg, Per, 2012. "Wind power integration using individual heat pumps – Analysis of different heat storage options," Energy, Elsevier, vol. 47(1), pages 284-293.
    25. Mathiesen, B.V. & Lund, H. & Connolly, D. & Wenzel, H. & Østergaard, P.A. & Möller, B. & Nielsen, S. & Ridjan, I. & Karnøe, P. & Sperling, K. & Hvelplund, F.K., 2015. "Smart Energy Systems for coherent 100% renewable energy and transport solutions," Applied Energy, Elsevier, vol. 145(C), pages 139-154.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Østergaard, P.A. & Lund, H. & Thellufsen, J.Z. & Sorknæs, P. & Mathiesen, B.V., 2022. "Review and validation of EnergyPLAN," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    2. Brown, T. & Schlachtberger, D. & Kies, A. & Schramm, S. & Greiner, M., 2018. "Synergies of sector coupling and transmission reinforcement in a cost-optimised, highly renewable European energy system," Energy, Elsevier, vol. 160(C), pages 720-739.
    3. Hansen, Kenneth & Breyer, Christian & Lund, Henrik, 2019. "Status and perspectives on 100% renewable energy systems," Energy, Elsevier, vol. 175(C), pages 471-480.
    4. Lund, Henrik & Thellufsen, Jakob Zinck & Sorknæs, Peter & Mathiesen, Brian Vad & Chang, Miguel & Madsen, Poul Thøis & Kany, Mikkel Strunge & Skov, Iva Ridjan, 2022. "Smart energy Denmark. A consistent and detailed strategy for a fully decarbonized society," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    5. Bačeković, Ivan & Østergaard, Poul Alberg, 2018. "Local smart energy systems and cross-system integration," Energy, Elsevier, vol. 151(C), pages 812-825.
    6. David Maya-Drysdale & Louise Krog Jensen & Brian Vad Mathiesen, 2020. "Energy Vision Strategies for the EU Green New Deal: A Case Study of European Cities," Energies, MDPI, vol. 13(9), pages 1-20, May.
    7. Thellufsen, Jakob Zinck & Lund, Henrik, 2017. "Cross-border versus cross-sector interconnectivity in renewable energy systems," Energy, Elsevier, vol. 124(C), pages 492-501.
    8. Md. Nasimul Islam Maruf, 2019. "Sector Coupling in the North Sea Region—A Review on the Energy System Modelling Perspective," Energies, MDPI, vol. 12(22), pages 1-35, November.
    9. Lund, Henrik & Østergaard, Poul Alberg & Chang, Miguel & Werner, Sven & Svendsen, Svend & Sorknæs, Peter & Thorsen, Jan Eric & Hvelplund, Frede & Mortensen, Bent Ole Gram & Mathiesen, Brian Vad & Boje, 2018. "The status of 4th generation district heating: Research and results," Energy, Elsevier, vol. 164(C), pages 147-159.
    10. Thellufsen, J.Z. & Lund, H. & Sorknæs, P. & Østergaard, P.A. & Chang, M. & Drysdale, D. & Nielsen, S. & Djørup, S.R. & Sperling, K., 2020. "Smart energy cities in a 100% renewable energy context," Renewable and Sustainable Energy Reviews, Elsevier, vol. 129(C).
    11. Mathiesen, B.V. & Lund, H. & Connolly, D. & Wenzel, H. & Østergaard, P.A. & Möller, B. & Nielsen, S. & Ridjan, I. & Karnøe, P. & Sperling, K. & Hvelplund, F.K., 2015. "Smart Energy Systems for coherent 100% renewable energy and transport solutions," Applied Energy, Elsevier, vol. 145(C), pages 139-154.
    12. Connolly, D. & Lund, H. & Mathiesen, B.V., 2016. "Smart Energy Europe: The technical and economic impact of one potential 100% renewable energy scenario for the European Union," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 1634-1653.
    13. Doepfert, Markus & Castro, Rui, 2021. "Techno-economic optimization of a 100% renewable energy system in 2050 for countries with high shares of hydropower: The case of Portugal," Renewable Energy, Elsevier, vol. 165(P1), pages 491-503.
    14. Lund, Henrik, 2018. "Renewable heating strategies and their consequences for storage and grid infrastructures comparing a smart grid to a smart energy systems approach," Energy, Elsevier, vol. 151(C), pages 94-102.
    15. Ma, Weiwu & Xue, Xinpei & Liu, Gang, 2018. "Techno-economic evaluation for hybrid renewable energy system: Application and merits," Energy, Elsevier, vol. 159(C), pages 385-409.
    16. Mahbub, Md Shahriar & Cozzini, Marco & Østergaard, Poul Alberg & Alberti, Fabrizio, 2016. "Combining multi-objective evolutionary algorithms and descriptive analytical modelling in energy scenario design," Applied Energy, Elsevier, vol. 164(C), pages 140-151.
    17. Diesendorf, Mark & Elliston, Ben, 2018. "The feasibility of 100% renewable electricity systems: A response to critics," Renewable and Sustainable Energy Reviews, Elsevier, vol. 93(C), pages 318-330.
    18. Menapace, Andrea & Thellufsen, Jakob Zinck & Pernigotto, Giovanni & Roberti, Francesca & Gasparella, Andrea & Righetti, Maurizio & Baratieri, Marco & Lund, Henrik, 2020. "The design of 100 % renewable smart urb an energy systems: The case of Bozen-Bolzano," Energy, Elsevier, vol. 207(C).
    19. Bačeković, Ivan & Østergaard, Poul Alberg, 2018. "A smart energy system approach vs a non-integrated renewable energy system approach to designing a future energy system in Zagreb," Energy, Elsevier, vol. 155(C), pages 824-837.
    20. Thellufsen, Jakob Zinck & Lund, Henrik, 2016. "Roles of local and national energy systems in the integration of renewable energy," Applied Energy, Elsevier, vol. 183(C), pages 419-429.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:162:y:2018:i:c:p:148-157. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.