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Renewable energy penetration and energy security in electricity markets

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  • Juan Pablo Ríos-Ocampo, Universidad Nacional de Colombia Medellin, Instituto Tecnologico Metropolitano, UNSW Business School
  • ,
  • Santiago Arango-Aramburo, Universidad Nacional de Colombia Medellin
  • ,
  • Erik Reimer Larsen

The transition from fossil fuels to renewable energies such as wind and solar is being encouraged worldwide. Renewable energy investment costs have been dropping, which, combined with growing incentives, has led to a rapid rise in renewable capacity. These changes in the electricity market entail great challenges and uncertainties, specifically due to resource availability. Wind and solar energy depend on seasonal weather conditions to generate energy, such as wind and radiation, respectively. However, few studies have focused on analyzing and measuring the impact of a progressive increase of renewable energy in a short-term electricity market and its effect on energy security. We developed a System Dynamics model to be able to analyze alternative scenarios and levels of uncertainties. We studied the impact of different shares of renewable sources on economic dispatch and energy security through reliability, reserve margin, resilience, and vulnerability measures. High shares of renewable resources (>60%) impact the energy security—reliability (< 98%), reserve margin (<-2%), resilience (>4%), and vulnerability—and may lower the spot price due to zero variable costs, which reduce the profitability of conventional firms in the short term and give closure to firms in the middle term and long term. Novelty Statement In this study, a system dynamics model is proposed to assess the electricity market configuration and the spot price while renewable energy sources (wind and solar) increase and conventional sources fall (hydropower and fossil fuel). Energy security is measured by including energy measures such as reliability, resilience, vulnerability, and reserve margin in a day-ahead market. The penetration of renewable energy creates a horizontal movement of the supply curve to the right, affecting wholesale electricity price, energy security, and firms' profitability. Highlights The effect of different shares of renewable energy in a day-ahead electricity market was studied. Energy security under renewable energy share on economic dispatch was considered. The analyses were performed using a system dynamics model for a theoretical market. High shares of renewable resources may lower the spot price due to zero variable costs. Low spot price reduces the profitability of both conventional and nonconventional firms.

OriginalsprogEngelsk
TidsskriftInternational Journal of Energy Research
Vol/bind45
Nummer12
Sider (fra-til)17767-17783
Antal sider17
ISSN0363-907X
DOI
StatusUdgivet - okt. 2021

Bibliografisk note

Funding Information:
This paper has been partially supported by the project “Estrategia de transformación del sector energético Colombiano en el Horizonte 2030,” financed by the call 778 Minciencias Scientific Ecosystem of the Colombia Cientifica Program (Contract number FP44842‐210‐2018).

Publisher Copyright:
© 2021 John Wiley & Sons Ltd.

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