Research Papers

This addendum calculates the Levelized Full System Costs of Electricity (LFSCOE) as

introduced by an earlier paper (see below) with most recent data (as of Jan 2023). In addition, we simulate

the LFSCOE-95 with decreasing storage costs, which extends the original paper.

Link to paper.

Levelized Costs of Electricity (LCOE) are a common metric to evaluate costs of power generation technologies but fail to account for costs associated with intermittency and non-dispatchability of generation, which makes them unable to evaluate renewables like wind and solar properly.

Different electricity generating technologies are often compared using the Levelized Costs of Electricity (LCOE), which summarize different ratios of fixed to variable costs into a single cost metric. They have been criticized for ignoring the effects of intermittency and non-dispatchability. This paper introduces the Levelized Full System Costs of Electricity (LFSCOE), a novel cost evaluation metric that compares the costs of serving the entire market using just one source plus storage. Like LCOE, and in contrast to alternatives such as System LCOE, LFSCOE condense the cost for each technology into one number per market. The paper calculates LFSCOE for several technologies using data from two different markets. It then discusses some refinements, including the LFSCOE-95 metric that require each technology to supply only 95\% of total demand.

Link to publication. Link to previous version.

The upcoming transition of the energy landscape towards renewables and the accompanying impacts on supply security is a controversial discussion in U.S. policy. This paper argues that transitioning towards renewable energy will increase supply security. After putting concerns of potential embargoes into perspective by pointing out the fundamental difference between construction risk and fuel risk, we argue that the overall mining requirements will decrease significantly when wind farms replace electricity generated from coal. 

Link to paper

Once they reach a relevant market share and evolve from price takers to market participants with significant market power, owners of large-scale electricity storage systems need to find an optimal bidding strategy in a multi-unit sequential spot price auction where they are both buyers and sellers. Using a novel computational approach tailored to electricity markets, this paper introduces a recursive bidding equilibrium algorithm that considers the dynamics of market power. Acknowledging the complexity and computational requirements, the paper concludes with two closed-form bidding solutions that can be used to approximate the recursive bidding algorithm and thus more suitable for extensive simulations. Link to most recent version.

This paper examines the feasibility of current wholesale market pricing mechanisms to support a market supplied solely by intermittent and non-dispatchable sources generating with zero-marginal costs (like wind and solar), plus storage. After introducing and discussing a comprehensive list of goals an optimal market mechanism must achieve, the paper proves that current pricing mechanisms will not satisfy these goals. Using game-theoretical analyses and simulations based on the German and ERCOT/Texas market data, this paper proposes a modified pricing mechanism that solves some but not all the issues of simple spot price auctions and concludes that the perfect pricing mechanism is yet to be found.

Link to most recent version

In February 2021, winter storm Uri caused a cascade of power outages in Texas, leaving millions of Texans without power our heating for several hours or days. Shortly after, we conducted a survey on participants experience during the storm and the willingness to pay to protect against the experienced outages. Based on this survey, this paper evaluates the Value of Lost Load (VOLL), the most common measure to determine optimal grid investment and welfare optimal supply reliability. We determine a VOLL for household of 1.77 USD/kWh, which is on the low end of existing estimations. As we observe that neither the length of outages nor the amount of lost power seems to be correlated with the willingness to pay to protect against these outages, our analysis questions any previous VOLL estimates that do not include welfare losses from individuals that did not lose power.

 Link to most recent version.