Abstract for: Interaction of Dynamics between Two Temporal Granularity Levels: Renewables Uptake and the Power Market

Learning-by-doing is a strong reinforcing process that continues to drive the uptake of renewable energy. But, as the renewables start to provide a larger share of electricity, their impact on electricity price becomes more detrimental for the profitability of the future investments. This would be further coupled with the impact of large-scale storage investments, both caused by and are influential on the changes in the power market. A proper representation of the linkages between these feedbacks requires interaction between long-term investment dynamics and short-term market operations. This paper aims to present how such an interaction can be formulated in practice, and what is the impact of incorporating the future disadvantages of renewables on their uptake. We show that accounting for the reduction in the profitability due to high renewables penetration can reduce the global installed capacity of solar and wind by 5-23% by 2050, compared to a formulation that ignores such an effect. We conclude the paper with practical considerations for modelling the interaction between two temporal granularity levels.