The Role of Financial Participants in the Renewable Energy Transition

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Abstract/Contents

Abstract: In Texas’s wholesale electricity market, purely financial participants can trade locational price differences between the day-ahead and real-time markets. Large investments in intermittent wind and solar capacity, characterized by highly correlated generation output across locations and hours of the day, have led to increasing volatility in the difference between the day-ahead and real-time price during times of unexpected weather changes. This paper analyzes the impact that this new renewable generation capacity has had on incentives for purely financial participants and their role in the energy transition, focusing on the evolving opportunity for financial participants to predict systematic risks and reduce production costs.

Author	Bower, Brennan
Advisor	Wolak, Frank

DOI	https://doi.org/10.25740/vg366gp8288, https://doi.org/10.25740/vg366gp8288
Location	https://purl.stanford.edu/vg366gp8288

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License: This work is licensed under a Creative Commons Attribution Non Commercial 4.0 International license (CC BY-NC).

Preferred citation: Bower, B. (2024). The Role of Financial Participants in the Renewable Energy Transition. Stanford Digital Repository. Available at https://purl.stanford.edu/vg366gp8288. https://doi.org/10.25740/vg366gp8288.

Stanford University, Department of Economics, Honors Theses

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