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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

Author

Listed:
  • Michael G. Pollitt

    (Energy Policy Research Group, University of Cambridge)

  • Karim L. Anaya

    (Energy Policy Research Group, University of Cambridge)

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.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

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," Working Papers EPRG 1519, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1519
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    Cited by:

    1. Schreiner, Lena & Madlener, Reinhard, 2022. "Investing in power grid infrastructure as a flexibility option: A DSGE assessment for Germany," Energy Economics, Elsevier, vol. 107(C).
    2. Karel Janda & Jan Malek & Lukas Recka, 2017. "Influence of Renewable Energy Sources on Electricity Transmission Networks in Central Europe," Working Papers IES 2017/05, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2017.
    3. Dodiek Ika Candra & Kilian Hartmann & Michael Nelles, 2018. "Economic Optimal Implementation of Virtual Power Plants in the German Power Market," Energies, MDPI, vol. 11(9), pages 1-24, September.
    4. Francisco Castellano Ruz & Michael G. Pollitt, 2016. "Overcoming Barriers to Electrical Energy Storage," Competition and Regulation in Network Industries, , vol. 17(2), pages 123-149, June.
    5. Cheng, Xiaobin & Liu, Pengfei & Zhu, Lei, 2024. "The impact of electricity market reform on renewable energy production," Energy Policy, Elsevier, vol. 194(C).
    6. Michael G. Pollitt, 2017. "The economic consequences of Brexit: energy," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(suppl_1), pages 134-143.
    7. Michael G. Pollitt & Lewis Dale, 2018. "Restructuring the Chinese Electricity Supply Sector – How industrial electricity prices are determined in a liberalized power market: lessons from Great Britain," Working Papers EPRG 1839, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    8. Simshauser, Paul & Gilmore, Joel, 2026. "On the electrification of gas loads in Australia's national electricity market," Energy Policy, Elsevier, vol. 208(C).
    9. Ritz, Robert A., 2016. "How does renewables competition affect forward contracting in electricity markets?," Economics Letters, Elsevier, vol. 146(C), pages 135-139.
    10. 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).
    11. Paul Simshauser, 2019. "On the impact of government-initiated CfD's in Australia's National Electricity Market," Working Papers EPRG 1901, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    12. Newbery, David & Pollitt, Michael G. & Ritz, Robert A. & Strielkowski, Wadim, 2018. "Market design for a high-renewables European electricity system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 91(C), pages 695-707.
    13. Kalkbrenner, Bernhard J. & Yonezawa, Koichi & Roosen, Jutta, 2017. "Consumer preferences for electricity tariffs: Does proximity matter?," Energy Policy, Elsevier, vol. 107(C), pages 413-424.
    14. Paul Simshauser, 2019. "On the Stability of Energy-Only Markets with Government-Initiated Contracts-for-Differences," Energies, MDPI, vol. 12(13), pages 1-24, July.
    15. Gohdes, Nicholas, 2025. "On spot revenues, capital structure and trade off theory: Analysing investment risk for contracted renewables," Energy Economics, Elsevier, vol. 148(C).

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    Keywords

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    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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