User:RobbieIanMorrison/sandbox/work in progress 3

✅ copied over on 30 September 2016


 * https://en.wikipedia.org/w/index.php?title=Merit_order&oldid=738834309
 * revision dated: 11:40 11 September 2016
 * copied over: 30 September 2016

Junk

 * Merit order effect — new page? (better both on one page for now)
 * User:RobbieIanMorrison/sandbox/references
 * de:Merit-Order — contains diagram
 * google: out of merit dispatch

The merit order in the British electricity market
The merit order was the method used in the electricity market of Great Britain when electrical power generation was the responsibility of a single integrated utility (the CEGB). After privatisation of the sector this was replaced by a more complex bidding system, the electricity pool, in 1990.

The merit order is a way of ranking available sources of energy, especially electrical generation, based on ascending order of price (which may reflect the order of their short-run marginal costs of production) together with amount of energy that will be generated. In a centralized management, the ranking is so that those with the lowest marginal costs are the first ones to be brought online to meet demand, and the plants with the highest marginal costs are the last to be brought on line. Dispatching generation in this way minimizes the cost of production of electricity. Sometimes generating units must be started out of merit order, due to transmission congestion, system reliability or other reasons.

The effect of renewable energy on merit order
The high demand for electricity during peak demand pushes up the bidding price for electricity, and the relatively inexpensive baseload power supply mix is supplemented by ‘peaking power plants,' which charge a premium for their electricity.

A 2013 study estimates the merit order effect of both wind and photovoltaic electricity generation in Germany between the years 2008 and 2012. For each additional GWh of renewables fed into the grid, the price of electricity in the day-ahead market is reduced by 0.11–0.13¢/kWh. The total merit order effect of wind and photovoltaics ranges from 0.5¢/kWh in 2010 to more than 1.1¢/kWh in 2012.

The zero marginal cost of wind energy does not, however, translate, into zero marginal cost of peak load electricity in a competitive open electricity market system as wind supply cannot be dispatched to meet peak demand. The purpose of the merit order was to enable the lowest net cost electricity to be dispatched first thus minimising overall electricity system costs to consumers. Intermittent wind might be able to supply this economic function provided peak wind supply and peak demand coincide both in time and quantity. On the other hand, solar energy tends to be most abundant during peak energy demand, maximizing its ability to displace coal and natural gas power.

A study by the Fraunhofer Institute in Karlsruhe, Germany found that windpower saves German consumers €5billion a year. It is estimated to have lowered prices in European countries with high wind generation by between 3 and 23€/MWh. On the other hand, renewable energy in Germany increased the price for electricity, consumers there now pay 52.8 €/MWh more only for renewable energy (see German Renewable Energy Sources Act), average price for electricity in Germany now is increased to 26¢/kWh.