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Renewable sources, technology mix, and competiton in liberalized electricity markets: the case of Spain

Nikolaos Georgantzís (), Aitor Ciarreta Antuñano () and Carlos Gutierrez-Hita ()

Working Papers. Serie EC from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: Este artículo trata el problema de cómo la competencia oligopolística es afectada por el desarrollo de las tecnologías que utilizan energías renovables dentro del marco de reducción de emisiones de CO2 y seguridad en el mercado eléctrico. En un modelo oligopolístico donde las empresas poseen plantas que utilizan recursos tanto renovables como no renovables, mostramos que los precios en el mercado mayorista decrecen a medida que las tecnologías que utilizan recursos renovables incrementan su eficiencia, hecho que también depende de la subvención fijada por el regulador. Sin embargo, encontramos que un subsidio excesivo puede distorsionar la competencia cuando la madurez tecnológica de los recursos renovables es lo suficientemente alta comparada con el coste de los recursos no renovables. Por último, contrastamos las predicciones del modelo utilizando datos del mercado eléctrico español. The paper addresses the question of how oligopolistic competition is affected by the development of renewable source technologies within the new framework of electricity supply security and reduction of emissions of CO2. In an oligopoly model where firms own renewable as well as non-renewable source technologies, we show that wholesale prices tend to decline the larger the efficiency achieved by renewable technologies depending also on the feed-in-tariff fixed by regulators. We found however that a high subsidy can distort competition when technical maturity of renewables is large as compared with the costs incurred by fossil sources. Finally, we test the predictions of the model using data from the Spanish electricity market.

Keywords: electricity technology mix; renewable energy sources; technical maturity; feed-in tariffs. mix tecnológico eléctrico; recursos energéticos renovables; madurez tecnológica; subvenciones (search for similar items in EconPapers)
JEL-codes: L13 L51 L94 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2010-05
New Economics Papers: this item is included in nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasec:2010-06

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