Electricity Provision with Intermittent Sources of Energy

Stefan Ambec (1, 2, 3) , Claude Crampes (4, 2)

1 LERNA - Economie des Ressources Naturelles
2 IDEI - Institut d'Economie Industrielle
3 GU - Göteborgs Universitet = University of Gothenburg
4 GREMAQ - Groupe de recherche en économie mathématique et quantitative

We analyze the interaction between a reliable source of electricity production and intermittent sources such as wind or solar power. We first characterize the optimal energy mix, emphasizing the availability of the intermittent source as a major parameter for the optimal investment in capacity. We then analyze decentralization through competitive market mechanisms. We show that decentralizing the efficient energy mix requires electricity to be priced contingently on the availability of the intermittent source. By contrast, traditional meters impose uniform pricing, which distorts the optimal mix of energy sources. Decentralizing the efficient energy mix with uniform prices requires either cross-subsidies from the intermittent source to the reliable source of energy or structural integration of the two types of technology.

Mots clés: renewable resource; wind electricity; solar energy; global warming; renewable energy; solar power

Mots clés: énergie renouvelable; énergie solaire

Domaines: Economies et finances

Stefan Ambec, Claude Crampes. Electricity Provision with Intermittent Sources of Energy. Resource and Energy Economics, 2012, 34 (3), pp.319-336. ⟨10.1016/j.reseneeco.2012.01.001⟩. ⟨hal-02118109⟩