Market Design in an Intermittent Renewable Future: Cost Recovery With Zero-Marginal-Cost Resources

IEEE Power and Energy Magazine, 2021

Authors: Frank A. Wolak

Abstract: The basic features of an efficient short-term wholesale market design do not necessarily need to change to accommodate a significantly larger share of zero-marginal-cost, intermittent renewable energy from wind and solar resources. A large share of controllable zero-marginal-cost generation does not create any additional market design challenge relative to a market with a large share of controllable positive marginal cost generation. Regardless of the technology, generation unit owners must recover their fixed costs from sales of energy, ancillary services, and long-term resource adequacy products.

Read the full article in IEEE Power and Energy Magazine, Volume: 19, Issue: 1.