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  4. November 2024
  5. Real-Time Pricing and the Cost of Clean Power

American Economic Journal:
Economic Policy

ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)

Real-Time Pricing and the Cost of Clean Power

  • Imelda
  • Matthias Fripp
  • Michael J. Roberts
American Economic Journal: Economic Policy
vol. 16, no. 4, November 2024
(pp. 100–141)
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Abstract

Solar and wind power are now cheaper than fossil fuels but are intermittent. The extra supply-side variability implies growing benefits of using real-time retail pricing (RTP). We evaluate the potential gains of RTP using a model that jointly solves investment, supply, storage, and demand to obtain a chronologically detailed dynamic equilibrium for the island of Oahu, Hawai'i. We find that, holding demand assumptions fixed, RTP reduces costs in high-renewable systems by roughly 6 to 12 times as much as in fossil systems, markedly lowering the cost of clean energy integration.

Citation

Imelda, Matthias Fripp, and Michael J. Roberts. 2024. "Real-Time Pricing and the Cost of Clean Power." American Economic Journal: Economic Policy, 16 (4): 100–141. DOI: 10.1257/pol.20220506

Additional Materials

JEL Classification

  • G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
  • L94 Electric Utilities
  • L98 Industry Studies: Utilities and Transportation: Government Policy
  • Q42 Alternative Energy Sources
  • Q48 Energy: Government Policy
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