Working Paper: NBER ID: w29033
Authors: Frank A. Wolak
Abstract: Growing amounts of intermittent renewable generation capacity substantially increases the complexity of determining whether sufficient energy will be available to meet hourly demands throughout the year. As the events of August 2020 in California and February 2021 in Texas demonstrate, supply shortfalls can have large economic and public health consequences. An empirical analysis of these two events demonstrates that similar supply shortfalls are likely to occur in the future without a paradigm shift in how long-term resource adequacy is determined for an electricity supply industry with significant intermittent renewables. An alternative approach to determining long-term resource adequacy that explicitly recognizes the characteristics of different generation technologies is outlined and its properties explored relative to current approaches.
Keywords: No keywords provided
JEL Codes: L22; L23; Q2; Q4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increasing share of intermittent renewables (Q42) | complicates ability to ensure that supply meets demand (J20) |
| complicates ability to ensure that supply meets demand (J20) | leads to supply shortfalls (J23) |
| insufficient energy availability (Q41) | leads to supply shortfalls (J23) |
| current mechanisms inadequacies (F32) | occurrence of supply shortfalls (Q31) |
| proposed Standardized Fixed Price Forward Contract (SFPFC) mechanism (G13) | assign risk to generation unit owners (L94) |
| proposed Standardized Fixed Price Forward Contract (SFPFC) mechanism (G13) | encourage cross-hedging of energy supply risk (Q47) |