Lab Releases Report Regarding Impacts of High Penetration of Variable Energy on Wholesale Electricity Pricing

The Lawrence Berkley National Laboratory has issued a report entitled Impacts of High Variable Renewable Energy Futures on Wholesale Electricity Prices, and on Electric-Sector Decision Making. The report provides a qualitative examination of various demand-side and supply-side electric infrastructure and program decisions that may change due to higher penetrations of variable renewable energy (VRE).  It notes that many of these decisions are “based on historical observations or assume a business-as-usual future with low shares of VRE” and that the authors’ “motivating question is whether certain electric-sector decisions that are made based on assumptions reflecting low VRE levels will still achieve their intended objective in a high VRE future.” The decisions addressed include, among other things:

  • What kind of demand response services are most cost-effective?
  • How efficient are different retail rate designs?
  • How large of an incentive is needed (if at all) to ensure revenue sufficiency for existing nuclear plants? Is it cost-effective to increase their flexibility?
  • What are the impacts of alternative water flow regimes in hydropower relicensing?

The report also provides simulation results for market conditions in the Southwest Power Pool, New York ISO, California ISO, and ERCOT regions in 2030 based on four penetration scenarios: (a) a low VRE scenario in which each market’s respective wind and solar generation levels equate to their 2016 levels, (b) a high wind scenario with 30% wind and 10+% solar, (c) a balanced scenario with 20% wind and 20% solar, and (d) a high solar scenario with 30% solar and 10+% wind. The modeling finds, among other things, that with the higher VRE penetration scenarios the average annual hourly wholesale energy prices decrease and price volatility increases in each market, especially under the high solar scenario.

A free webinar on the findings will be held on May 23 at 1:00 P.M. EDT/10:00 A.M. PDT.

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