ICER16-14 -- How to Integrate Large Shares of Variable Renewables in Electricity Systems ✓ Most Recent

Increasing shares of variable renewable energy sources (RES) in electricity generation have in recent years changed the usual pattern of electricity markets especially in Western Europe remarkably. These developments have led to the situation that the development of electricity markets is currently at a crucial crossing. The way to a sustainable electricity system based mainly on RES could be paved in the next years without further significant subsidies. In this context we emphasize especially the considerable price decreases of PV which has brought this technology close to cost-effectiveness on household level, soon without any further need for subsidies. On the other hand there are forces which intend to retain the old system by introducing centralized capacity payments for fossil capacities. The core objective of this paper is to provide insights on the conditions that will bring about competitive sustainable system with higher shares of RES.