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

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  • Nikolaos Georgantzis

    ()
    (Universitat Jaume I)

  • Aitor Ciarreta

    (Universidad de Alicante)

  • Carlos Gutiérrez-Hita

    (Universidad de Alicante)

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.

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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie EC with number 2010-06.

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Length: 32 pages
Date of creation: May 2010
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasec:2010-06

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Keywords: electricity technology mix; renewable energy sources; technical maturity; feed-in tariffs. mix tecnológico eléctrico; recursos energéticos renovables; madurez tecnológica; subvenciones;

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  1. Palmer, Karen & Burtraw, Dallas, 2005. "Cost-effectiveness of renewable electricity policies," Energy Economics, Elsevier, vol. 27(6), pages 873-894, November.
  2. Maria Teresa Balaguer-Coll & Diego Prior & Emili Tortosa-Ausina, . "Devolution Dynamics of Spanish Local Government," Working Paper 201001, Department of Business Economics, Universitat Autonoma de Barcelona.
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  6. Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-77, November.
  7. Pilar Beneito López & Amparo Sanchis Llopis & María Engracia Rochina Barrachina, 2009. "The role of learning in innovation: in-house versus externally contracted R&D experience," Working Papers. Serie EC 2009-11, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  8. Jacint Balaguer Coll & José C. Pernías, 2010. "Spatial density, average prices and price dispersion. Evidence from the Spanish hotel industry," Working Papers. Serie EC 2010-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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