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oai:dspace.mit.edu:1721.1/1627492025-09-19T04:50:00Zcom_1721.1_7582com_1721.1_7581col_1721.1_131023

Knittel, Christopher Xie, Le Irvine, Paul M. Massachusetts Institute of Technology. Department of Electrical Engineering and Computer Science 2025-09-18T14:30:27Z 2025-09-18T14:30:27Z 2025-05 2025-06-23T14:02:23.302Z https://hdl.handle.net/1721.1/162749 http://orcid.org/0000-0002-6976-053X Renewable generators may have incentives to strategically withhold energy output in electricity markets, either to exercise market power or to avoid congestion pricing caused by transmission constraints. Although academic work often treats renewables as not downward dispatchable, renewable generators technically can, at least in principle, reduce their output by self-curtailing. This paper shows that a firm with a large, diverse portfolio could find it profit-maximizing to withhold renewables over conventional thermal generators once it accounts for constraints on ramp rates and minimum generation, as well as the costs associated with starting-up generators and the probability of detection on generator type by market monitoring authorities. Long-term forward contracts like pay-as-produced Power Purchase Agreements (PPAs) can blunt incentives to exercise market power by insulating individual generators from wholesale prices; however, since generators under PPAs typically bid into the wholesale market and influence competitive prices, they may actually encourage renewable withholding if contract prices are sufficiently low and the parent firm’s portfolio is exposed to wholesale prices. To screen for renewable withholding, this paper proposes three methods: (1) examining the distribution of aggregate output across export interfaces for suspicious bunching, (2) testing deviations from ex-ante forecasts, and (3) identifying the time intervals where generators encounter model structural changes compared to a benchmark presumed free of withholding. Together, this work prepares academics and regulators to more accurately model the behavior of renewable generators in electricity markets and to screen for potential market abuses. M.Eng. Massachusetts Institute of Technology In Copyright - Educational Use Permitted Copyright retained by author(s) https://rightsstatements.org/page/InC-EDU/1.0/ Strategic Physical Withholding of Renewable Energy Generators Thesis application/pdf Master Master of Engineering in Electrical Engineering and Computer Science Publication unknown unknown <Publication xmlns="https://www.openaire.eu/cerif-profile/1.1/" id="34d1fc79-8f22-4274-83b8-5b9e2113c44f"> <Type xmlns="https://www.openaire.eu/cerif-profile/vocab/COAR_Publication_Types">http://purl.org/coar/resource_type/c_1843</Type> <Title>Strategic Physical Withholding of Renewable Energy Generators</Title> <PublishedIn> <Publication> </Publication> </PublishedIn> <PublicationDate>2025-05</PublicationDate> <Authors> <Author> <DisplayName>Irvine, Paul M.</DisplayName> <Affiliation> <OrgUnit> </OrgUnit> </Affiliation> </Author> </Authors> <Editors> </Editors> <Publishers> <Publisher> <DisplayName>Massachusetts Institute of Technology</DisplayName> <OrgUnit /> </Publisher> </Publishers> <License>https://rightsstatements.org/page/InC-EDU/1.0/</License> <Abstract>Renewable generators may have incentives to strategically withhold energy output in electricity markets, either to exercise market power or to avoid congestion pricing caused by transmission constraints. Although academic work often treats renewables as not downward dispatchable, renewable generators technically can, at least in principle, reduce their output by self-curtailing. This paper shows that a firm with a large, diverse portfolio could find it profit-maximizing to withhold renewables over conventional thermal generators once it accounts for constraints on ramp rates and minimum generation, as well as the costs associated with starting-up generators and the probability of detection on generator type by market monitoring authorities. Long-term forward contracts like pay-as-produced Power Purchase Agreements (PPAs) can blunt incentives to exercise market power by insulating individual generators from wholesale prices; however, since generators under PPAs typically bid into the wholesale market and influence competitive prices, they may actually encourage renewable withholding if contract prices are sufficiently low and the parent firm’s portfolio is exposed to wholesale prices. To screen for renewable withholding, this paper proposes three methods: (1) examining the distribution of aggregate output across export interfaces for suspicious bunching, (2) testing deviations from ex-ante forecasts, and (3) identifying the time intervals where generators encounter model structural changes compared to a benchmark presumed free of withholding. Together, this work prepares academics and regulators to more accurately model the behavior of renewable generators in electricity markets and to screen for potential market abuses.</Abstract> <Access xmlns="http://purl.org/coar/access_right" > </Access> </Publication>