The effectiveness of a strategic reserve in the presence of a high portfolio share of renewable energy sources

Journal article (2016)

Authors

P.C. Bhagwat Energy and Industry
J.C. Richstein Energy and Industry
E.J.L. Chappin Energy and Industry
Laurens De Vries Energy and Industry
Research Group
Energy and Industry
Copyright: © 2016 P.C. Bhagwat, J.C. Richstein, E.J.L. Chappin, Laurens De Vries
DOI: https://doi.org/10.1016/j.jup.2016.01.006
Agent-based modeling Strategic reserve Capacity mechanisms
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Published Date

2016

Language

English

Research Group

Energy and Industry

Abstract

To ensure sufficient investment in electricity generation capacity, mechanisms such as strategic reserves are being considered or already implemented. We analyze the effectiveness of a strategic reserve in the presence of a growing portfolio share of renewable energy sources (RES) with EMLab-Generation, an agent-based electricity market model. A strategic reserve can stabilize investment, but within limits. Uncertainty regarding future demand may cause the market to become instable, potentially leading to periods with very high electricity prices. In the presence of a large share of variable renewable energy sources, the reserve design should be adjusted or replaced by an alternative capacity mechanism.