Template-Type: ReDIF-Article 1.0
Author-Name:  Leonard Göke and Reinhard Madlener
Title:  High Taxes on Cloudy Days: Dynamic State-Induced Price Components in Power Markets
Classification-JEL: F0
Volume:  Volume 43
Issue:  Number 1
Year:  2022
Abstract:  State-induced components constitute the major share of electricity prices for consumers and are generally charged at a fixed rate. We analyze the benefits of charging state-induced price components at time-varying rates instead, especially with regard to the integration of variable renewable energy (VRE) sources and to decarbonization. For this purpose, we apply a detailed power market model that puts particular emphasis on electricity demand and how it is sensitive to prices. For a quantitative case study, the model is parametrized to represent a German energy system with an 85% share of renewables in its power generation. We find that dynamization has a reducing effect on integration costs of VRE, ranging from 0.3 to 3.4 ¬/MWh. Furthermore, strong distributional effects in favor of flexible consumers can be observed.
Handle: RePEc:aen:journl:ej43-1-Göke
File-URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=3782
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