The impact of wind and solar power generation on the level and volatility of wholesale electricity prices in Greece

Georgios I. Maniatis and Nikolaos Milonas

Energy Policy, 2022, vol. 170, issue C

Abstract: We investigate the impact of wind and solar power generation on the level and volatility of wholesale electricity prices in the Greek electricity market from August 2012 to December 2018. In the context of a GARCH-in-Mean model the empirical findings suggest the existence of the merit-order effect which is stronger in the case of wind power. Controlling for regulatory mechanisms that may affect price volatility, we find that while overall renewables have decreased price volatility, wind power tends to increase it and solar power tends to decrease it. Furthermore, during peak hours, wind and solar power generation tend to decrease price volatility, supporting the hypothesis that renewables’ output reduces the volatility of wholesale electricity prices when it is positively correlated with the electricity load. Finally, we find that the increase in the price-cap of the Greek wholesale electricity market was associated with a reduction in the volatility of wholesale electricity prices. This finding highlights the importance of the market structure and the degree of vertical integration of participants in liberalized electricity markets, which determines their behavior while also affecting market price volatility.

Keywords: Wholesale electricity market; Electricity price volatility; Wind power; Solar power; Price-caps; Merit-order effect (search for similar items in EconPapers)
JEL-codes: Q41 Q42 Q48 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421522004621
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:170:y:2022:i:c:s0301421522004621

DOI: 10.1016/j.enpol.2022.113243

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 ().