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Real-time electricity pricing to balance green energy intermittency

Ambec, Stefan and Crampes, Claude (2021) Real-time electricity pricing to balance green energy intermittency. Energy Economics, vol. 94 (n° 105074).

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Official URL : http://tse-fr.eu/pub/125130
Identification Number : 10.1016/j.eneco.2020.105074

Abstract

The presence of consumers able to respond to changes in wholesale electricity prices facilitates the penetration of renewable intermittent sources of energy such as wind or sun power. We investigate how adapting demand to intermittent electricity supply by making consumers price-responsive - thanks to smart meters and home automation appliances - impacts the energy mix. We show that it almost always reduces carbon emissions. Furthermore, when consumers are not too risk-averse, demand response is socially beneficial because the loss from exposing consumers to volatile prices is more than offset by lower production and environmental costs. However, the gain is decreasing when the proportion of reactive consumers increases. Therefore, depending on the costs of the necessary smart hardware, it may be non-optimal to equip the whole population.

Item Type: Article
Language: English
Date: February 2021
Refereed: Yes
Uncontrolled Keywords: Electricity, Intermittency, Renewables, Dynamic pricing, Demand response, Smart meters
JEL Classification: D24 - Production; Cost; Capital and Total Factor Productivity; Capacity
D62 - Externalities
Q41 - Demand and Supply
Q42 - Alternative Energy Sources
Q48 - Government Policy
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 26 Feb 2021 11:43
Last Modified: 26 Feb 2021 11:43
OAI Identifier: oai:tse-fr.eu:125130
URI: http://publications.ut-capitole.fr/id/eprint/42251

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