Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/210951
Authors: 
Tangerås, Thomas P.
Wolak, Frank A.
Year of Publication: 
2019
Series/Report no.: 
IFN Working Paper 1310
Abstract: 
The variability of solar and wind generation increases transmission network operating costs associated with maintaining system stability. These ancillary services costs are likely to increase as a share of total energy costs in regions with ambitious renewable energy targets. We examine how efficient deployment of intermittent renewable generation capacity across locations depends on the costs of balancing real-time system demand and supply. We then show how locational marginal network tariffs can be designed to implement the efficient outcome for intermittent renewable generation unit location decisions. We demonstrate the practical applicability of this approach by applying our theory to obtain quantitative results for the California electricity market.
Subjects: 
Ancillary services costs
Efficiency
Locational marginal network tariffs
Renewable electricity generation
System stability
JEL: 
L94
Q20
Q42
Document Type: 
Working Paper

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