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Is it all about supply? Demand-side effects on the Spanish electricity market following Covid-19 lockdown policies

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  • Pizarro-Irizar, Cristina

Abstract

A key characteristic of electricity prices is their sensitivity to changes in supply and demand. In this sense, the Covid-19 lockdown policies modified electricity consumption patterns at both business and household levels, affecting the shape and position of the electricity demand curve and, thus, leading to a direct effect on electricity prices. However, could this demand-side effect be greater than other supply-induced effects? Is it persistent over time? This paper uses a synthetic bidding approach and concludes that the strict lockdown phase had a strong, immediate – but not persistent – effect on the Spanish electricity price. Furthermore, a high share of renewable energy and a reduction in fossil fuel and emission prices have also proven crucial in driving prices down, though lockdown policies had more impact on prices.

Suggested Citation

  • Pizarro-Irizar, Cristina, 2023. "Is it all about supply? Demand-side effects on the Spanish electricity market following Covid-19 lockdown policies," Utilities Policy, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:juipol:v:80:y:2023:i:c:s0957178722001369
    DOI: 10.1016/j.jup.2022.101472
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