Price Impacts of Energy Transition on the Interconnected Wholesale Electricity Markets in the Northeast United States

Jay Zarnikau (), Chi-Keung Woo, Kang Hua Cao and Han Steffan Qi
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Chi-Keung Woo: Centre for Sustainable Development Studies, Hong Kong Baptist University, Hong Kong, China
Kang Hua Cao: Department of Accountancy, Economics and Finance, Hong Kong Baptist University, Hong Kong, China
Han Steffan Qi: Shenzhen Audencia Financial Technology Institute, Shenzhen University, Shenzhen 518060, China

Energies, 2025, vol. 18, issue 15, 1-18

Abstract: Our regression analysis documents that energy policies to promote renewable energy development, as well as hydroelectric imports from Canada, lead to short-run reductions in average electricity prices (also known as merit-order effects) throughout the Northeast United States. Changes in the reliance upon renewable energy in one of the Northeast’s three interconnected electricity markets will impact wholesale prices in the other two. The retirement of a 1000 MW nuclear plant can increase prices by about 9% in the Independent System Operator of New England market and 7% in the New York Independent System Operator market in the short run at reference hubs, while also raising prices in neighboring markets. Some proposed large-scale off-shore wind farms would not only lower prices in local markets at the reference hubs modeled but would also lower prices in neighboring markets.

Keywords: wholesale electricity price; merit-order effect; energy transition; regional transmission organizations; Northeastern U.S. (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: 2025
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