The economic dynamics of competing power generation sources

Competing power generation sources have experienced considerable shifts in both their revenue potential and costs recent years. Here we introduce the concept of Levelized Profit Margins (LPM) to capture changing unit economics intermittent dispatchable technologies. We apply this framework context California Texas wholesale markets. Our LPM estimates indicate that solar photovoltaic wind substantially improved competitive position during years 2012–2019, primarily due falling life-cycle production. In California, these gains far outweigh an emerging “cannibalization” effect results from substantial additions having made energy less valuable middle day. As such, renewables states been approaching or exceeding break-even value zero for estimated LPMs. also find competitiveness natural gas plants either held steady at negative LPMs California. For plants, declining capacity utilization rates effectively counterbalanced by a “dispatchability price premium” reflects growing market share renewables. • Intermittent experience revenues To dynamics, first then calibrate economic model markets Cost declines cannibalization The has