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Intermittent electric generation technologies and smart meters: substitutes or complements

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  • Fadoua Chiba
  • Sebastien Rouillon

Abstract

We model a simplified electric market with producers using either conventional or intermittent electric generators and consumers equipped with either smart or traditional meters. We calculate the investment in intermittent technologies and smart meters in a social optimum. We find that the optimal penetration of smart meters is increasing in the volatility of the electric spot price. As a consequence, intermittent capacities and smart-meters are complement, only if the correlation existing between intermittent energy and demand is negative or if the capacity of intermittent generators is large enough. Otherwise, larger intermittent capacities actually help to decrease the volatility of the electric spot price, making smart-meters less useful. We also give a numeral application, calibrated to represent the French electric market in 2016 and policy objective for 2030. We show in particular that a general adoption of smart meters would be optimal only if the cost of installing and operating smart meters was unrealistically low.

Suggested Citation

  • Fadoua Chiba & Sebastien Rouillon, 2018. "Intermittent electric generation technologies and smart meters: substitutes or complements," Cahiers du GREThA (2007-2019) 2018-11, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    • Handle: RePEc:grt:wpegrt:2018-11
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    References listed on IDEAS

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    Cited by:

    1. Nandeeta Neerunjun, 2022. "Emissions pricing instruments with intermittent renewables: second-best policy," Working Papers hal-03740013, HAL.
    2. Nandeeta Neerunjun, 2022. "Emissions pricing instruments with intermittent renewables: second-best policy," AMSE Working Papers 2215, Aix-Marseille School of Economics, France.

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    More about this item

    Keywords

    Capacity choice; electricity; intermittency; renewable energy;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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