The Impact of Intermittent Power Generation on the Wholesale Electricity Prices of the MIBEL Iberian Market

Paulo Pereira da Silva and Paulo Horta
Authors registered in the RePEc Author Service: Paulo Pereira da Silva

Economics of Energy & Environmental Policy, 2020, vol. Volume 9, issue Number 2

Abstract: This study addresses the effect of intermittent renewable energy generation on the dynamics of electricity prices of the Iberian market (Spain and Portugal) during the period 2010-2015. The results indicate that intermittent renewable energy has a material negative effect on electricity price, consistent with the presence of a merit-order effect. Still, that effect varies with the technology employed: wind power produces a greater impact on price vis-a-vis solar photovoltaic energy. Daily wind supply and daily demand display a higher correlation than daily solar photovoltaic power and daily demand. That implies that wind supply can be used more effectively as a hedging tool for demand variation, thereby bringing about greater price impact. Notably, there is no evidence that the impact of intermittent renewable electricity penetration has been declining over time or that marginal negative returns result from additional installed capacity at this point. Finally, the findings of this study suggest that market coupling weighs (negatively) on the elasticity of price to intermittent renewable energy production. This result is consistent with the notion that further market integration improves risk sharing and efficient resource allocation.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.iaee.org/en/publications/eeeparticle.aspx?id=330 (text/html)
Access to full text is restricted to IAEE members and subscribers.

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:aen:eeepjl:eeep9-1-dasilva

Ordering information: This journal article can be ordered from
http://www.iaee.org/ ... ons/eeepjournal.aspx

Access Statistics for this article

More articles in Economics of Energy & Environmental Policy from International Association for Energy Economics Contact information at EDIRC.
Bibliographic data for series maintained by David Williams ().