Renewable Generation and Electricity Prices: Taking Stock and New Evidence for Germany and Austria

Klaas WŸrzburg (), Xavier Labandeira () and Pedro Linares ()
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Klaas WŸrzburg: Economics for Energy and Rede (Universidade de Vigo)
Xavier Labandeira: Economics for Energy and Rede (Universidade de Vigo)

Working Papers from Economics for Energy

Abstract: Economic theory predicts that high renewable electricity production reduces the price of electricity, also referred to as the 'merit-order efecto'. Although the merit-order effect is only one of several consequences of renewable production on the electricity system, it is crucial to determine its size for the economic evaluation of renewable energies. In this paper we present a comprehensive overview of relevant past research results on the price effect of renewables. Additionally, we conduct a new empirical analysis of the price effect of renewable production for the Austrian-German region, a market that clearly qualifies for a merit-order effect analysis given its characteristics. Based on the review and our own analysis, we show that the merit-order effect varies depending on the region and the assessment method chosen. We also find that the size of this effect is less dispersed throughout different markets than previously suggested by the literature.

Keywords: Wind; solar; merit-order; supply (search for similar items in EconPapers)
JEL-codes: Q41 Q42 Q48 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2013-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (192)

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Journal Article: Renewable generation and electricity prices: Taking stock and new evidence for Germany and Austria (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:efe:wpaper:fa03-2013

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