Influence of Increasing Renewable Power Penetration on the Long-Term Iberian Electricity Market Prices

Pedro Leal, Rui Castro () and Fernando Lopes
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Pedro Leal: Instituto Superior Técnico, University of Lisbon, 1049-001 Lisbon, Portugal
Rui Castro: INESC-ID/IST, University of Lisbon, 1000-029 Lisbon, Portugal
Fernando Lopes: LNEG, National Laboratory of Energy and Geology, 1649-038 Lisbon, Portugal

Energies, 2023, vol. 16, issue 3, 1-19

Abstract: In recent years, there has been a significant increase in investment in renewable energy sources, leading to the decarbonization of the electricity sector. Accordingly, a key concern is the influence of this process on future electricity market prices, which are expected to decrease with the increasing generation of renewable power. This is important for both current and future investors, as it can affect profitability. To address these concerns, a long-term analysis is proposed here to examine the influence of the future electricity mix on Iberian electricity prices in 2030. In this study, we employed artificial intelligence forecasting models that incorporated the main electricity price-driven components of MIBEL, providing accurate predictions for the real operation of the market. These can be extrapolated into the future to predict electricity prices in a scenario with high renewable power penetration. The results, obtained considering a framework featuring an increase in the penetration of renewables into MIBEL of up to 80% in 2030, showed that electricity prices are expected to decrease by around 50% in 2030 when compared to 2019, and there will be a new pattern of electricity prices throughout the year due to the uneven distribution of renewable electricity. The study’s findings are relevant for ongoing research on the unique challenges of energy markets with high levels of renewable generation.

Keywords: renewable energy; electricity market prices; missing money problem; long-term forecast; artificial neural networks (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
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