fbpx The missing money problem: Incorporation of increased resources from wind in a representative US power market | Harvard Kennedy School

Additional Authors:

  • Michael McElroy
  • Xinyu Chen

Excerpt

The missing money problem: Incorporation of increased resources from wind in a representative US power market. Michael McElroy, Xinyu Chen, 2018, Paper, "The paper considers opportunities to reduce emissions of CO 2 through increases in commitments to wind in a representative US power market. A model is applied to simulate market operations for different wind levels focusing on implications of the reduction in clearing prices arising due to increasing inputs of zero marginal cost power from wind, a dilemma referred to as the missing money problem. The resulting decrease in income poses problems for existing thermal and nuclear generating systems, at the same time making investments in wind uneconomic in the absence offsetting policy interventions. Two options are considered to subsidize cost: an investment credit (IC) or a subsidy on production (PC)." Link