Economic curtailment of intermittent renewable energy sources

In a power system featuring a large share of intermittent renewables and inflexible thermal generators, efficiency gains could be achieved by curtailing the production of renewables. However, as renewables feature very low variable production costs, over-curtailment can be costly. In this article, we use a stylised analytical model to assess this trade-off. We show that while curtailing renewables when their variability is high and the system flexibility is low can reduce generation costs, the different stakeholders will not necessarily benefit from such measures. As a consequence, leaving this decision to generators will lead to a sub-optimal level of curtailment. Either incentives to provide accurate RES availability forecasts or alternatively centralised forecasting should be put into place to solve the resulting problem of asymmetry of information.