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Modeling electricity markets when renewable power increases

Author

Listed:
  • Eriksson, Clas
  • Lindén, Johan
  • Papahristodoulou, Christos

Abstract

We analyze theoretically a simple model of the electricity market where the supply of Variable Renewable Electricity (VRE) and demand are both shifting stochastically over time. The correlation between these shifts is crucial for the equilibrium price of electricity. Based on hourly equilibria we compute yearly producer surpluses, consumer utility and the value factor of VRE, under different conditions.

Suggested Citation

  • Eriksson, Clas & Lindén, Johan & Papahristodoulou, Christos, 2026. "Modeling electricity markets when renewable power increases," Economic Modelling, Elsevier, vol. 157(C).
    • Handle: RePEc:eee:ecmode:v:157:y:2026:i:c:s0264999326000337
    DOI: 10.1016/j.econmod.2026.107504
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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