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The effectiveness of a strategic reserve in the presence of a high portfolio share of renewable energy sources

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  • Bhagwat, Pradyumna C.
  • Richstein, Jörn C.
  • Chappin, Emile J.L.
  • de Vries, Laurens J.

Abstract

To ensure sufficient investment in electricity generation capacity, mechanisms such as strategic reserves are being considered or already implemented. We analyze the effectiveness of a strategic reserve in the presence of a growing portfolio share of renewable energy sources (RES) with EMLab-Generation, an agent-based electricity market model. A strategic reserve can stabilize investment, but within limits. Uncertainty regarding future demand may cause the market to become instable, potentially leading to periods with very high electricity prices. In the presence of a large share of variable renewable energy sources, the reserve design should be adjusted or replaced by an alternative capacity mechanism.

Suggested Citation

  • Bhagwat, Pradyumna C. & Richstein, Jörn C. & Chappin, Emile J.L. & de Vries, Laurens J., 2016. "The effectiveness of a strategic reserve in the presence of a high portfolio share of renewable energy sources," Utilities Policy, Elsevier, vol. 39(C), pages 13-28.
  • Handle: RePEc:eee:juipol:v:39:y:2016:i:c:p:13-28
    DOI: 10.1016/j.jup.2016.01.006
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    1. repec:eee:juipol:v:48:y:2017:i:c:p:76-91 is not listed on IDEAS
    2. repec:eee:enepol:v:111:y:2017:i:c:p:255-267 is not listed on IDEAS
    3. repec:eee:appene:v:214:y:2018:i:c:p:39-62 is not listed on IDEAS
    4. repec:eee:juipol:v:46:y:2017:i:c:p:33-47 is not listed on IDEAS
    5. repec:eee:eneeco:v:66:y:2017:i:c:p:372-383 is not listed on IDEAS
    6. repec:eee:enepol:v:106:y:2017:i:c:p:169-182 is not listed on IDEAS
    7. Bublitz, Andreas & Keles, Dogan & Zimmermann, Florian & Fraunholz, Christoph & Fichtner, Wolf, 2018. "A survey on electricity market design: Insights from theory and real-world implementations of capacity remuneration mechanisms," Working Paper Series in Production and Energy 27, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
    8. repec:eee:rensus:v:82:y:2018:i:p3:p:3441-3451 is not listed on IDEAS

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