The Economic and Climate Value of Flexibility in Green Energy Markets
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10640_2021_Article_605.pdf
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1.32 MB
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Unknown
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Author(s)
Abrell, Jan
Rausch, Sebastian
Streitberger, Clemens
Date Issued
September 2021
Publisher
Springer Netherlands
Citation
Abrell, Jan, Rausch, Sebastian and Streitberger, Clemens. 2021. "The Economic and Climate Value of Flexibility in Green Energy Markets."
Version
Final published version
Abstract
Abstract
This paper examines how enhanced flexibility across space, time, and a regulatory dimension affects the economic costs and CO
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emissions of integrating large shares of intermittent renewable energy from wind and solar. We develop a numerical model which resolves hourly dispatch and investment choices among heterogeneous energy technologies and natural resources in interconnected wholesale electricity markets, cross-country trade (spatial flexibility), energy storage (temporal flexibility), and tradable green quotas (regulatory flexibility). Taking the model to the data for the case of Europe’s system of interconnected electricity markets, we find that the appropriate combination of flexibility can bring about substantial gains in economic efficiency, reduce costs (up to 13.8%) and lower CO
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emissions (up to 51.2%). Regulatory flexibility is necessary to realize most of the maximum possible benefits. We also find that gains from increased flexibility are unevenly distributed and that some countries incur welfare losses.
MIT Department
Massachusetts Institute of Technology. Joint Program on the Science & Policy of Global Change
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Creative Commons Attribution
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DOI of Published Version
https://doi.org/10.1007/s10640-021-00605-6
