Selling Random Wind

Wind power is inherently random, but we are used to 100 percent reliable or 'firm' electricity, so reserves are used to convert random wind power into firm electricity. The cost of these reserves is frequently a hidden subsidy to wind power producers. We propose an alternative: package random wind power into electricity with different levels of reliability and sell them at different prices. This variable-reliability market is more efficient than the current firm-electricity market, and may require lower subsidy. However, we have to think of electricity differently. We also explore interesting differences between the variable-reliability and related real-time markets.