Renewable energy intermittency and its impact on thermal generation

Electricity production from renewable sources generally displaces thermal generation, which leads to lower CO2 emissions in the power sector. However, the intermittent nature of many renewable technologies leads to greater inefficiencies in the operation of existing fossil power plants. This inefficiency translates into higher production costs as well as a higher rate of emissions relative to output. In this paper we focus on Italian power installations. Using panel econometrics, we show that a 10% increase in photovoltaics and wind infeed has reduced yearly CO2 emissions of the average thermal installation by about 4% while the average plants emissions relative to its output have increased by about 0.3% between 2005 and 2014. Given the additional inefficiency caused by intermittent renewables, our results suggest that the average installation actually only achieves around 94% of the expected reductions. The effect is more pronounced for installations that have not been retrofitted and for installations serving peak demand.