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Cannibalization, depredation, and market remuneration of power plants

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  • Peña, Juan Ignacio
  • Rodríguez, Rosa
  • Mayoral, Silvia

Abstract

The decarbonization strategy of the electricity sector relies on renewable energy. However, increasing renewables gives cannibalization and depredation effects. Cannibalization appears when increasing penetration of renewables undermines their own market remuneration. Depredation arises when increased renewable penetration undermines the market remuneration of other technologies. This paper documents cannibalization and depredation effects in the Spanish electricity market from 2014 to 2020. Increases in wind and solar penetration reduce market remuneration of all technologies. With wind, depredation and cannibalization effects are non-linear. Higher solar and wind penetration reduces remuneration volatility to wind, solar, and gas but increases those of coal and nuclear.

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  • Peña, Juan Ignacio & Rodríguez, Rosa & Mayoral, Silvia, 2022. "Cannibalization, depredation, and market remuneration of power plants," Energy Policy, Elsevier, vol. 167(C).
    • Handle: RePEc:eee:enepol:v:167:y:2022:i:c:s0301421522003111
    DOI: 10.1016/j.enpol.2022.113086
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    Cited by:

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    2. Diego Fernando Vargas-Sosa & Oscar Danilo Montoya & Luis Fernando Grisales-Noreña, 2023. "Efficient Integration of Photovoltaic Solar Generators in Monopolar DC Networks through a Convex Mixed-Integer Optimization Model," Sustainability, MDPI, vol. 15(10), pages 1-17, May.
    3. Reichenberg, L. & Ekholm, T. & Boomsma, T., 2023. "Revenue and risk of variable renewable electricity investment: The cannibalization effect under high market penetration," Energy, Elsevier, vol. 284(C).

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    More about this item

    Keywords

    Cannibalization effect; Depredation effect; Renewable energy; Market remuneration;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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