How Nuclear Power Plants in Spain are reacting to the Massive Introduction of Renewable Energy

Margaret Armstrong (), Asana Sasaki (), Frederic Novel-Cattin () and Alain Galli
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Margaret Armstrong: CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique
Asana Sasaki: ENPC - École nationale des ponts et chaussées
Frederic Novel-Cattin: Technocentre Renault [Guyancourt] - RENAULT
Alain Galli: CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper analyses the evolution of the bidding strategies of nuclear power plants on the Spanish day-ahead auction market, over the 11-year period from 2002 until December 2012. During that time the proportion of renewable energy especially wind and solar power increased dramatically. At the outset the nuclear plants offered almost all their production at zero cost; by the end, several were offering about 5% of their production at about 91 euro per MWh compared to the market ceiling price of 180.3 euro per MWh. This change in bidding strategy effectively increased the average wholesale price of electricity, leading to an overall increase in the revenues to power sellers of about $200 million euros per year in 2010 -2012, compared to what it would have been had they offered all their production at zero -cost. These results have important policy implications for regulatory authorities.

Keywords: Strategic bidding; Market power; Day-ahead market; Wholesale electricity market (search for similar items in EconPapers)
Date: 2014-09-23
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-reg
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