Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/265937 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9902
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Renewable energy resources possess unique characteristics—intermittency and uncertainty— that pose challenges to electricity grid operations. We study these characteristics and find that uncertainty, represented by wind forecast error, has larger grid impacts than intermittency, or hourly generation changes. Uncertainty yields roughly double the price effects and roughly double the number of conventional generator start-ups, as compared to perfectly forecast wind. While this finding is important given the persistence of wind forecast error over the study period, reducing wind forecast error to the level of demand forecast error would lower costs by a modest half a million dollars per year.
Subjects: 
renewable energy
electricity prices and price dispersion
electricity grid management
JEL: 
Q40
Q42
Q47
Document Type: 
Working Paper
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