Quantifying the short-term asymmetric effects of renewable energy on the electricity merit-order curve

Kyriaki Tselika, Maria Tselika and Elias Demetriades

Energy Economics, 2024, vol. 132, issue C

Abstract: Amidst the growing significance of renewable energy, this paper examines the asymmetric effects of renewable energy on electricity prices and transmission flows in the Nordics using hourly electricity data. Employing a novel panel asymmetric fixed-effects method, we quantify the non-linear impact of renewable generation technologies on the electricity supply curve. Contrary to previous research, our analysis challenges the assumption of wind having symmetric effects in electricity markets. Specifically, we suggest that an increase in renewable energy cannot lead to price reductions of the same magnitude as the price increases caused by a decrease in wind. In addition, we investigate interconnections between regions and explore asymmetries in transmission flows due to wind generation. Our findings reveal the presence of asymmetric effects in the Nordic electricity market, highlighting their significance in achieving a secure electricity system. These results offer valuable insights for governments, policymakers, and market participants for optimizing the electricity generation mix, prioritizing flexible systems, and making informed investment decisions.

Keywords: Electricity markets; Wind power; Asymmetric effects; Panel regression (search for similar items in EconPapers)
JEL-codes: C23 C51 C52 Q21 Q41 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:132:y:2024:i:c:s0140988324001798

DOI: 10.1016/j.eneco.2024.107471

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