The electricity industry is undergoing the deepest transformation of its history, driven by decarbonization, decentralization and decarbonization: new technologies from solar photovoltaics to batteries and the internet of things reshape how electricity is produced, transported, traded and consumed. Understanding this revolution requires understanding the interactions between electricity systems, technologies, economics, markets, and regulation.
Good energy policy requires a sound understanding of the fundamental physics and economics as well as the institutional and legal framework that shape power systems and markets. The goal of this course is to equip students with this knowledge.
After a crash-course in power plant technology and electricity systems engineering, we will discuss the drivers of cost of electricity, with a particular focus on renewable energy and the cost revolution that has made wind and solar energy cost-competitive with fossil fuels. We will then develop tools to assess the value of electricity, based on a rigorous assessment of electricity markets. Students will learn methods to derive an optimal long-term electricity generation mix and to evaluate the economics of wind and solar energy. A particular focus will be the “market value” (average revenue) of wind and solar energy. We will see why the value of renewable electricity drops as its share in total electricity supply increases and discuss the (unsettling) implications of this outcome for the long-term economics of renewables, and learn what can be done to mitigate the value drop. Apart from economics of electricity generation, the course will discuss fundamentals principles of electricity grids and options to integrate renewable energy into existing power systems (electricity storage, network expansion, flexible power plants), and the rise of “prosumers”. These are the relevant issues not only in Germany’s Energiewende, but also in upcoming EU legislation and a number of emerging economies.
This course is for 2nd year MIA and MPP students only.