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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

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  • 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.)

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
    as

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    References listed on IDEAS

    as
    1. David M. Newbery, 2005. "Electricity liberalization in Britain: The quest for a satisfactory wholesale market design," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 43-70.
    2. Paul L. Joskow, 2006. "Markets for Power in the United States: An Interim Assessment," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-36.
    3. Anaya, Karim L. & Pollitt, Michael G., 2015. "Integrating distributed generation: Regulation and trends in three leading countries," Energy Policy, Elsevier, vol. 85(C), pages 475-486.
    4. Claire M. Weiller & Michael G. Pollitt, 2013. "Platform Markets and Energy Services," Cambridge Working Papers in Economics 1361, Faculty of Economics, University of Cambridge.
    5. M. Pollitt, 2004. "Electricity reform in Chile. Lessons for developing countries," Competition and Regulation in Network Industries, Intersentia, vol. 5(3), pages 221-263, September.
    6. Michael G. Pollitt, 2008. "The Future of Electricity (and Gas) Regulation," Working Papers EPRG 0811, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    7. Tooraj Jamasb and Michael Pollitt, 2005. "Electricity Market Reform in the European Union: Review of Progress toward Liberalization & Integration," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 11-42.
    8. Anaya, Karim L. & Pollitt, Michael G., 2015. "Options for allocating and releasing distribution system capacity: Deciding between interruptible connections and firm DG connections," Applied Energy, Elsevier, vol. 144(C), pages 96-105.
    9. Mir-Artigues, Pere, 2013. "The Spanish regulation of the photovoltaic demand-side generation," Energy Policy, Elsevier, vol. 63(C), pages 664-673.
    10. Anaya, Karim L. & Pollitt, Michael G., 2014. "Experience with smarter commercial arrangements for distributed wind generation," Energy Policy, Elsevier, vol. 71(C), pages 52-62.
    11. Ahmad Faruqui & Sanem Sergici, 2010. "Household response to dynamic pricing of electricity: a survey of 15 experiments," Journal of Regulatory Economics, Springer, vol. 38(2), pages 193-225, October.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Pollitt, M. & Dale, L., 2018. "Restructuring the Chinese Electricity Supply Sector - How industrial electricity prices are determined in a liberalized power market: lessons from Great Britain," Cambridge Working Papers in Economics 1871, Faculty of Economics, University of Cambridge.
    2. repec:eee:rensus:v:77:y:2017:i:c:p:461-473 is not listed on IDEAS
    3. repec:oup:oxford:v:33:y:2017:i:suppl_1:p:s134-s143. is not listed on IDEAS
    4. Janda, Karel & Málek, Jan & Rečka, Lukáš, 2017. "Influence of renewable energy sources on transmission networks in Central Europe," Energy Policy, Elsevier, vol. 108(C), pages 524-537.
    5. repec:eee:juipol:v:57:y:2019:i:c:p:97-105 is not listed on IDEAS
    6. repec:eee:enepol:v:110:y:2017:i:c:p:191-201 is not listed on IDEAS
    7. Ritz, Robert A., 2016. "How does renewables competition affect forward contracting in electricity markets?," Economics Letters, Elsevier, vol. 146(C), pages 135-139.
    8. 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.
    9. repec:gam:jeners:v:11:y:2018:i:9:p:2365-:d:168475 is not listed on IDEAS
    10. repec:eee:eneeco:v:72:y:2018:i:c:p:1-19 is not listed on IDEAS
    11. Simshauser, P., 2019. "On the impact of government-initiated CfD’s in Australia’s National Electricity Market," Cambridge Working Papers in Economics 1901, Faculty of Economics, University of Cambridge.
    12. repec:eee:enepol:v:120:y:2018:i:c:p:697-713 is not listed on IDEAS
    13. 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.
    14. 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).
    15. Karsten Neuhoff & Nils May & Jörn C. Richstein, 2018. "Renewable Energy Policy in the Age of Falling Technology Costs," Discussion Papers of DIW Berlin 1746, DIW Berlin, German Institute for Economic Research.
    16. Michael G. Pollitt, 2017. "The economic consequences of Brexit: energy," Oxford Review of Economic Policy, Oxford University Press, vol. 33(suppl_1), pages 134-143.
    17. repec:eee:enepol:v:116:y:2018:i:c:p:210-219 is not listed on IDEAS
    18. repec:gam:jeners:v:12:y:2019:i:13:p:2566-:d:245448 is not listed on IDEAS

    More about this item

    Keywords

    renewables; electricity markets; Germany; UK; New York;

    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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