Distributed energy generation techniques and the competitive fringe effect in electricity markets

Machiel Mulder, Vaiva Petrikaite and Bert Scholtens

Resource and Energy Economics, 2015, vol. 42, issue C, 125-140

Abstract: We analyse the impact of two different generation techniques used by fringe suppliers on the intensity of competition in the electricity wholesale market. For that purpose, we derive a Cournot model of this market taking into account long-term contracts, international trade and fringe suppliers using different energy generating technologies. We apply this model to the Dutch market and estimate the impact of fringe supply on the Lerner index. We find that the fringe supply coming from both intermittent wind generation and combined heat and power (CHP) plants operated by horticultural farmers increases competition, which leads to lower prices in the electricity market. However, this impact is relatively small. The effect per unit of intermittent wind electricity generation on competition and, therefore, prices is stronger than that of the CHP technology.

Keywords: Green technology; Quantity competition; Fringe effect; CHP; Wind energy (search for similar items in EconPapers)
JEL-codes: D24 D61 L13 Q27 Q41 Q57 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:42:y:2015:i:c:p:125-140

DOI: 10.1016/j.reseneeco.2015.07.004

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