Chasing the sun and catching the wind: Energy transition and electricity prices in Europe

Serhan Cevik and Keitaro Ninomiya

Journal of Economics and Finance, 2023, vol. 47, issue 4, No 5, 912-935

Abstract: Abstract European power markets are in the midst of unprecedented changes, with a record-breaking surge in energy prices. This paper investigates the impact of the green transition on the level and volatility of wholesale electricity prices at a granular level, using monthly observations for a panel of 24 European countries over the period 2014–2021 and alternative estimation methods including a panel quantile regression approach. We find that renewable energy is associated with a significant reduction in wholesale electricity prices in Europe, with an average impact of 0.6 percent for each 1 percentage points increase in renewable share. We also find evidence for a nonlinear effect—that is, higher the share of renewables, the greater its effect on electricity prices. On the other hand, while quantile estimation results are mixed with regards to the impact of renewables on the volatility of electricity prices, we obtain evidence that renewable energy has a negative effect on volatility at the highest quantiles. Overall, our analysis indicates that policy reforms can help accelerate the green transition while minimizing the volatility in electricity prices.

Keywords: Energy transition; Renewables; Electiricity prices; Panel quantile regression; Europe (search for similar items in EconPapers)
JEL-codes: C21 C23 C34 Q41 Q42 Q48 (search for similar items in EconPapers)
Date: 2023
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s12197-023-09626-x Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Chasing the Sun and Catching the Wind: Energy Transition and Electricity Prices in Europe (2022)
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:spr:jecfin:v:47:y:2023:i:4:d:10.1007_s12197-023-09626-x

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/12197/PS2

DOI: 10.1007/s12197-023-09626-x

Access Statistics for this article

Journal of Economics and Finance is currently edited by James Payne

More articles in Journal of Economics and Finance from Springer, Academy of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().