Locational Marginal Network Tariffs for Intermittent Renewable Generation

Working Papers

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Program on Energy and Sustainable Development, page(s): 42

November 29, 2019

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The variability of solar and wind generation increases transmission network operating costs associated with maintaining system stability. These ancillary services costs are likely to increase as a share of total energy costs in regions with ambitious renewable energy targets. We examine how ecient deployment of intermittent renewable generation capacity across locations depends on the costs of balancing real-time system demand and supply. We then show how locational marginal network taris can be designed to implement the ecient outcome for intermittent renewable generation unit location decisions. We demonstrate the practical applicability of this approach by applying our theory to obtain quantitative results for the California electricity market.

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