Assessing the Impact of Renewable Energy Sources: Simulation analysis of the Japanese electricity market

Author Name YOSHIHARA Keisuke (University of Tokyo) / OHASHI Hiroshi (Faculty Fellow, RIETI)
Creation Date/NO. April 2017 17-E-063
Research Project Basic Research on New Industrial Policy
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This paper evaluates the impact of renewable energy (RE) sources on market outcomes in Japan. We develop a simulation model to compute the kWh-market equilibrium, and conduct simulation exercises for 2015 and 2030. Using scenarios proposed by the government, we find that the diffusion of RE sources would lower the kWh-market prices and greenhouse gases by reducing fossil fuel consumption in 2030. It would also mothball many of the thermal power plants, which were active and profitable in 2015.