Title: The Long-run Impact of Wind Power on Electricity Prices and Generating Capacity (joint work with Nicholas Vasilakos)
Speaker: Prof. Richard Green – Alan and Sabine Howard Professor of Sustainable Energy Business at Imperial College Business School
Affiliation: Imperial College London
Location: Room 344A Huxley Building
Time: 2:00pm
Abstract. This paper uses a market equilibrium model to calculate how the mix of generating capacity would change if large amounts of intermittent renewables are built in Great Britain, and what this means for operating patterns and the distribution of prices over time. If generators bid their marginal costs, we find that the changes to the capacity mix are much greater than the changes to the pattern of prices. Thermal capacity falls only slightly in response to the extra wind capacity, and there is a shift towards power stations with higher variable costs (but lower fixed costs). The changes to the pattern of prices, once capacity has adjusted, are relatively small. In an oligopolistic setting, strategic generators will choose lower levels of capacity. If wind output does not receive the market price, then mark-ups on thermal generation will be lower in a system with large amounts of wind power.
About the speaker. Richard Green is the Alan and Sabine Howard Professor of Sustainable Energy Business at Imperial College Business School. He was previously Professor of Energy Economics and Director of the Institute for Energy Research and Policy at the University of Birmingham, and Professor of Economics at the University of Hull. He started his career at the Department of Applied Economics and Fitzwilliam College, Cambridge. He has spent time on secondment to the Office of Electricity Regulation and has held visiting appointments at the World Bank, the University of California Energy Institute and the Massachusetts Institute of Technology. He has been studying the economics and regulation of the electricity industry for over 20 years. He has written extensively on market power in wholesale electricity markets and has also worked on transmission pricing. More recently, the main focus of his work has been on the impact of low-carbon generation (nuclear and renewables) on the electricity market, and the business and policy implications of this.