Abstract
We use a large Texas database to quantify the effect of rising wind generation on the payoffs of a tolling agreement for natural-gas-fired generation of electricity. We find that while a 20% increase in wind generation may not have a statistically-significant effect, a 40% increase can reduce the agreement's average payoff by 8% to 13%. Since natural-gas-fired generation is necessary for integrating large amounts of intermittent wind energy into an electric grid, our finding contributes to the policy debate of capacity adequacy and system reliability in a restructured electricity market that will see large-scale wind-generation development.
Original language | English |
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Pages (from-to) | 207-230 |
Number of pages | 24 |
Journal | Energy Journal |
Volume | 33 |
Issue number | 1 |
DOIs | |
Publication status | Published - 2012 |
Scopus Subject Areas
- Economics and Econometrics
- General Energy
User-Defined Keywords
- Investment incentive
- Spark spread option
- Tolling agreement
- Wind generation