ASSESSING ECONOMIC RESILIENCE OF THE NORTH AMERICAN ELECTRICITY MARKET UNDER DIFFERENT PRICE SHOCKS TO NATURAL GAS
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After wide adoption of hydraulic fracking and renewable energy in the late 2000s, North America has seen a large influx of low-cost natural gas and increased renewable energy capacity, both becoming main sources of electricity generation. The electricity market's reliance on natural gas increases its exposure to volatile natural gas prices. This paper investigates the economic resilience of the North American electricity market due to four different natural gas price shocks and renewable energy policies. Under these price shock scenarios, the electricity market’s resilience is measured the time required to recover the deviation from total system cost incurred by electricity market players relative to the business-as-usual scenario. Using the North American Electricity Model (NANELM), a partial equilibrium model that describes the behavior of electricity producers and transmission operators, we can measure the resilience and observe the behavior of generators and transmission operators. Although the electricity market reacts differently in all four price shock scenarios, they show that the market is under-prepared for sudden changes in natural gas prices and current infrastructure prevents recovery back to the business-as-usual electricity prices.