Intermittent versus dispatchable power sources: An integrated competitive assessment

Glenk, Gunther ; Reichelstein, Stefan

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URN: urn:nbn:de:bsz:180-madoc-601040
Document Type: Working paper
Year of publication: 2021
The title of a journal, publication series: TRR 266 Accounting for Transparency Working Papers Series
Volume: 58
Place of publication: Mannheim
Publication language: English
Institution: Business School > Stiftungsprofessur für ABWL (Reichelstein 2018-)
License: CC BY 4.0 Creative Commons Attribution 4.0 International (CC BY 4.0)
Subject: 330 Economics
Classification: JEL: M1 , O33 , Q41 , Q42 , Q48 , Q54 , Q55,
Keywords (English): renewable energy , intermittency , dispatchable power , levelized cost , profit margins
Abstract: The cost and revenue earnings potential of alternative power generation sources has shifted considerably in recent years. Here we introduce the concept of Levelized Profit Margins (LPM) to capture the changing unit economics of both intermittent and dispatchable generation technologies. We apply this framework in the context of the California and Texas wholesale power markets. Our LPM estimates indicate that solar photovoltaic and wind power have both substantially improved their competitive position over the years 2012 - 2019, primarily due to falling life-cycle costs of production. In California, these gains far outweigh an emerging "cannibalization" trend that results from substantial additions of solar power having made energy less valuable in the middle of the day. We also and the competitiveness of natural gas power plants to have either improved or held steady. For this generation technology, declining capacity utilization rates have electively been counterbalanced by a "dispatchability price premium" that reects the growing market share of intermittent renewables.
Additional information: Online-Ressource

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