Designing electricity markets for high penetrations of zero or low marginal cost intermittent energy sources

Abstract

Integrating intermittent renewable generation with near zero private marginal costs for generating electricity will change market outcomes, but this article emphasizes that this integration does not change the fundamental economic principles behind market design. Market designs still need to adequately price scarcity and all network constraints and services. Such pricing is required to deliver investment incentives for the right technologies to locate at the right locations to efficiently maintain a stable and reliable electrical network.