 The new merit order: The viability of energy-only electricity markets with only intermittent renewable energy sources and grid-scale storageWerner Antweiler and Felix Muesgens Energy Economics, 2025, vol. 145, issue C Abstract: What happens to the merit order of electricity markets when all electricity is supplied by intermittent renewable energy sources coupled with large-scale electricity storage? With near-zero marginal cost of production, will there still be a role for an energy-only electricity market? We answer these questions both analytically and empirically for electricity markets in Texas and Germany. What emerges in market equilibrium is the ‘new merit order’. Curtailment at zero prices is a necessary feature of the new merit order, complementing peak prices to cover fixed costs of storage. Storage cannot ‘solve’ curtailment, because curtailment provides essential zero-price periods. Our work demonstrates that as long as free entry and competition ensure effective price setting, an efficient new merit order emerges in electricity markets even when the grid is completely powered by intermittent sources with near-zero marginal costs. We find that energy-only markets remain viable and functional. Keywords: Electricity market equilibrium; 100% renewables and storage; System prices; Merit order (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:145:y:2025:i:c:s0140988325002634 DOI: 10.1016/j.eneco.2025.108439 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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