EU Energy Markets and Renewable Energy Sources—Are We Waiting for a Crisis?

Tomasz Sieńko () and Jerzy Szczepanik ()
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Tomasz Sieńko: Faculty of Electrical and Computer Engineering, Cracow University of Technology, ul. Warszawska 24, 31-155 Kraków, Poland
Jerzy Szczepanik: Faculty of Electrical and Computer Engineering, Cracow University of Technology, ul. Warszawska 24, 31-155 Kraków, Poland

Energies, 2025, vol. 18, issue 15, 1-19

Abstract: Interactions between the increased penetration of the power system by renewable energy sources (RESs) and the energy pricing mechanism in the EU (day-ahead market) can lead to many unexpected and paradoxical consequences. This article analyses the case of the long-term maintenance of prices around zero on the day-ahead market in south-western Europe at a certain time of a day. This is an important case since, at the same time, this area generates electricity from a similar source mix as it is in the target for the EU. Zero or very low energy prices are becoming increasingly common across the EU. This can pose a problem for the stability of the electricity supply, as it translates into a lower power of used disposable power sources, which can be used as a reserve when the majority of the energy supply comes from renewable energy sources. Furthermore, this work refutes the most frequently proposed solution to the problem of excessively low prices based on energy storage systems. This work attempts to analyze the long-term low-price situation in Spain and extrapolate the expected consequences based on it; however, it is difficult to find all the factors that occur in the power system and influence the price market and vice versa. The issue is multidimensional and complex, and the analyzed situation revealed a number of trends. Therefore, a multifaceted problem remains. A constant electricity supply must be ensured at a reasonable price, thus avoiding the exposure of individual consumers to energy shortages or significant price increases, while, at the same time, the EU must reduce dependence on fossil fuels, and its legislation must push for reduced CO 2 emissions. On the other hand, the EU must provide some type of market mechanism to support the achievement of these goals because the current pricing mechanism based on the day-ahead market does not seem to be effective. This article aims to spark a discussion about this problem; it does not provide any simple solutions to it.

Keywords: renewable energy; electricity markets; variation in electricity prices (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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