The effect of wind and solar power generation on wholesale electricity prices in Australia

Zsuzsanna Csereklyei, Songze Qu and Tiho Ancev

Energy Policy, 2019, vol. 131, issue C, 358-369

Abstract: Our paper investigates the effect of wind and utility-scale solar electricity generation on wholesale electricity prices in Australia over 2010–2018. We use both high frequency (30-min) and daily datasets for the Australian National Electricity Market (NEM). We estimate autoregressive distributed lag models (ARDL) to decompose the merit order effect of wind and utility-scale solar PV generation over time and across states. We find that an extra GW of dispatched wind capacity decreases the wholesale electricity price by 11 AUD/MWh at the time of generation, while solar capacity by 14 AUD/MWh. The daily merit order effect is lower. We show that the wind merit order effect has been increasing as a function of dispatched wind capacity over time. Despite of this, wholesale electricity prices in Australia have been increasing, predominantly driven by the increase in natural gas prices. Our findings further strengthen the evidence of the merit order effect of renewable energy sources, with important implications for the current energy policy debate in Australia.

Keywords: Electricity price; Merit order effect; Natural gas price; Solar generation; Wind generation (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (57)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421519302435
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:131:y:2019:i:c:p:358-369

DOI: 10.1016/j.enpol.2019.04.007

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().