Potential limitations of marginal pricing for a power system based on renewables
| dc.contributor.author | Garcia-Casals, Xavier | |
| dc.contributor.author | Bianco, Emanuele | |
| dc.date.accessioned | 2024-03-05T09:14:23Z | |
| dc.date.available | 2024-03-05T09:14:23Z | |
| dc.date.issued | 2022 | |
| dc.description.abstract | Marginal pricing wholesale power markets could produce significant barriers for the energy transition, and on their own do not appear to be appropriate organisational structures for renewables-based power systems. Besides the well-known cannibalisation and merit order effects (depressing renewable generator revenues as the transition advances), under a marginal pricing-based power system organisational structure, the high difference in marginal costs of the technologies needed to operate a renewables-based power system (bulk renewable generation and flexibility) may lead to socio-political instabilities such as those experienced during 2022 as a consequence of high natural gas prices. A way to prevent the misalignments and transition barriers explored in this Technical paper is to change the power system organisational structure in such a way that it honours the different techno-economic characteristics of both bulk renewable electricity generation and flexibility. IRENA’s dual procurement proposal is an example of such an organisational structure. Marginal pricing can still play a role but with its scope limited to the procurement of flexibility. | |
| dc.identifier.uri | https://www.irena.org/-/media/Irena/Files/Technical-papers/IRENA_Limitations_marginal_pricing_renewables_2022.pdf?rev=414bd062f7934aadae50db984e0f493a | |
| dc.identifier.uri | https://lhg.cput.ac.za//handle/123456789/238 | |
| dc.language.iso | en | |
| dc.publisher | International Renewable Energy Agency (IRENA) | |
| dc.relation.ispartofseries | Technical paper ; 3/2022 | |
| dc.subject | Renewable energy sources | |
| dc.subject | Electric power production | |
| dc.subject | Energy development | |
| dc.title | Potential limitations of marginal pricing for a power system based on renewables | |
| dc.type | Technical Report |