Impacts of Variable Renewable Energy on Bulk Power System Assets, Pricing, and Costs

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We synthesize available literature, data, and analysis on the degree to which growth in variable renewable energy (VRE) has impacted to date or might in the future impact bulk power system assets, pricing, and costs. We do not analyze impacts on specific power plants, instead focusing on national and regional system-level trends. The issues addressed are highly context dependent—affected by the underlying generation mix of the system, the amount of wind and solar penetration, and the design and structure of the bulk power system in each region. Moreover, analyzing the impacts of VRE on the bulk power system is a complex area of research and there is much more to be done to increase understanding of how VRE impacts the dynamics of current and future electricity markets.

While more analysis is warranted, including additional location-specific assessments, several high-level findings emerge from this synthesis:

  • VRE Is Already Impacting the Bulk Power Market
  • VRE Impacts on Average Wholesale Prices Have Been Modest
  • VRE Impacts on Power Plant Retirements Have So Far Been Limited
  • VRE Impacts on the Bulk Power Market will Grow with Penetration
  • The ’System Value’ of VRE will Decline with Penetration
  • Power System Flexibility Can Reduce the Rate of VRE Value Decline

All generation types are unique in some respect—bringing benefits and challenges to the power system—and wholesale markets, industry investments, and operational procedures have evolved over time to manage the characteristics of a changing generation fleet. With increased VRE penetrations, power system planners, operators, regulators, and policymakers will continue to be challenged to develop methods to smoothly and cost-effectively manage the reliable integration of these new and growing sources of electricity supply.

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A link to a webinar recorded on December 13, 2017 can be found here. A journal article published in March 2020, in Renewable and Sustainable Energy Reviews can be found here


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