Assessment of RES technology market values and the merit-order effect – an econometric multi-country analysis. Issue 1 (February 2016)

• Record Type: Journal Article
• Authors: Welisch, Marijke; Ortner, André; Resch, Gustav
• Is Part Of: Energy & environment. Volume 27:Issue 1(2016)
• Page Start: 105
• Page End: 121
• Publication Date: 2016-02
• Subjects: Merit-order effect -- market value of renewable electricity -- European electricity markets -- variable renewables; Power resources -- Environmental aspects -- Periodicals; Power resources -- Periodicals; Renewable energy sources -- Periodicals; Energy policy -- Environmental aspects -- Periodicals; Ressources énergétiques; Politique énergétique; Energy policy -- Environmental aspects; Power resources; Power resources -- Environmental aspects; Renewable energy sources; Periodicals; 333.7
• DOI: 10.1177/0958305X16638574
• Languages: English
• ISSNs: 0958-305X

Abstract

This study presents an assessment of both the merit-order effect and the market values of electricity generated from variable renewable energy sources, namely wind and solar photovoltaics. The historical price development in several European countries – that cover 73% of the renewable energy source share in Europe's regional electricity markets – has been taken into account. To gain insights into the impact of renewable electricity on prices, market values and the merit-order effect were calculated using a multivariate regression analysis and ex-post calculations. All the countries analyzed show a consistent, negative impact of renewable electricity on electricity spot market prices and a decreasing market value of renewable energy source, possibly attributable to increased shares. The coefficients are economically and statistically significant. This study provides insights into a large geographical spread of European electricity markets, enables a comparison between countries, and therefore has valuable implications for policy makers.