Renewables drive power prices down in today's market, maybe even more than they should, because power markets, which use the merit-order effect, were not designed around power sources with zero marginal costs.

Quote from a german utility:

'“Renewables have shifted the merit order and now it’s like we have two different markets, one for renewables with 20 years’ guaranteed FIT, and one competitive for conventional power plants,” Thorsten Korner, the head of energy trading at Stadtwerke, told Bloomberg. “We have to think about integrating renewables and how we will organize 80 percent renewables on the grid by 2050.”'

The article goes on to say:

"However, new sources from grid flexibility would be needed to manage the daily fluctuations from solar and wind generation, and this needed to come from a suite of supply- and demand-side options, including flexible conventional generation, grid storage, new transmission, more responsive loads, and changes in power system operations.
NREL estimates such a scenario would result in average annual retail electricity price increases of 0.8 per cen to 1.2 per cent – compared to around 0.3 per cent on the baseline scenario. But tis was based on technology costs estimated in 2010. Solar PV is already half its price then, and the costs are likely to be significantly lower than forecast.
The bottom line, however, is the need for a complete transformation of the current electricity system – including generation, transmission, and markets."

28 Jun 2012 - 7:49
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