Implications of Growing Wind and Solar Penetration in Retail Electricity Markets with Gradual Demand Response

The results obtained represent a major break with the literature (see Section 5) and help to advance understanding of the conditions under which the price formation process in retail electricity markets can reward the provision of operational flexibility on the grid. [...] The first two constraints (i.e., Equations (5) and (6)) deal with the condition of the pump, and the remaining two constraints (i.e., Equations (7) and (8)) deal with the condition of the reservoir. [...] 10,000 On the demand side of the m10a,00r0ket, the first panel of Figure 6 shows that consumer 30% w ind and solar share compared to the benchmark case 60% w ind and solar share compared to the benchmark case 8,000 rent increases in some cases especi8a,00l0ly when prices fall due to growth in wind and solar 6,000 generation (such as in the months o6,0f0 0January, February, April and November), and. [...] Turning to the scenario where wind and solar share further increases to supply 60% of demand relative to the benchmark case as indicated in the second panel of Figure 6, the results suggest an increase in producer rent of 8370 million RMB (compared to 8390 mil- lion RMB in the 30% renewable case), a decrease in consumer rent of 7664 million RMB (compared to 7700 million RMB in the 30% renewable ca. [...] In additional to economic policy, the results of this paper are also of value to the scientific community especially in terms of widening the debate on how the price formation process in electricity markets can adequately reward the demand for operational flexibility due to growth in intermittent generation.