Browsing by Author "Idel, Robert"

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    Efficiency in a New World - Electricity Markets with Renewables and Storage
    (2022-04-18) Idel, Robert; Hartley, Peter
    This dissertation addresses seven questions and challenges around electricity markets supplied by wind, solar, and storage. First, we examine the characteristics of the physical electricity system required if the power supply comes from wind, solar, and storage. As wind and solar are now responsible for balancing the electricity system, we can evaluate the cost of generating electricity by augmenting previous cost measures. Next, we zoom out and ask: What constitutes a good design for any electricity wholesale market? Compiling a comprehensive list of 9 goals that address efficiency, we observe that hourly spot price auctions can easily fulfill them if all generating facilities only face variable costs and no fixed costs. But as renewables do not meet this cost structure, we then examine which market designs and pricing mechanisms can support a wind, solar, and storage market in Germany and Texas. While showing that spot price auctions perform very poorly on the nine goals, some of their challenges might be resolved by a significant drop in storage costs and the accompanying change in market dynamics. Before simulating these markets, however, we thoroughly examine the bidding behavior of market participants in renewables plus storage markets. Recognizing complicated bidding considerations of storage owners in such a market leads to introducing a recursive bidding algorithm and two closed-form bidding solutions. Last, we specifically address welfare optimal supply reliability, one of the nine goals of a power market design. Reliability in electricity markets can be evaluated using the (marginal) Value of Lost Load, which we estimate using a household survey on the experience during the Texas Snow Storm 2021 and the accompanying power outages. Related to reliability is energy security during the energy transition, where we present a model arguing that energy security can, in fact, increase energy security.