Coupling planning and operations to quantify reliability, investment and market performance in decarbonising electricity systems

Ensuring the reliable and economic performance of electricity systems with very low emissions are critical challenges that span the planning and operational timescales. This paper therefore presents a modelling framework that unifies investment planning with wholesale electricity market operations by including the operational forecast uncertainties of both variable renewable generation (VRG) and demand as well as full unit commitment constraints. This allows us to assess the impacts of operational uncertainty on wholesale electricity market performance as electricity systems decarbonise. The most decarbonised, reliable fleets without clean firm generation then feature VRG uptake of 80% or more of annual demand, whilst then also requiring reserve margins that are comparable to the average electricity demand. This not only raises total costs significantly to maintain reliability, it can also compromise price signalling and increase investment risk. Since these problems are a consequence of stochastic supply/demand mismatches caused by operationally uncertain VRG, they cannot be solved by improved market design. Rather, these findings suggest that improving the operational forecasting of VRG and enabling the deployment of hydropower, nuclear and other forms of clean firm generation are both urgent priorities if we wish to decarbonise rapidly, reliably and more affordably.