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Beyond the Mean: Examining Electricity Spot Price Distribution in Australia

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  • Muthe Mathias Mwampashi
  • Christina Sklibosios Nikitopoulos

Abstract

We extend beyond conventional mean-to-mean effects to examine how fundamental variables impact the entire distribution of electricity spot prices in the Australian National Electricity Market. Employing quantile regression models, we demonstrate that variable renewable energy (VRE) generation effectively lowers spot prices at lower quantiles when electricity is relatively inexpensive. However, its role in reducing prices is marginal or negligible at higher quantiles when electricity becomes more costly. High gas prices persist as a significant market challenge, with marginal increases causing price surges at the tails of the price distribution. Analysis of the 2022 energy crisis shows the limited capability of VRE and interconnectors to counteract high gas and coal prices, along with opportunistic hydro generators. The findings underscore the need for policies promoting further renewable energy adoption, a reassessment of the role of gas generation, and strategies to enhance energy market resilience. JEL Classification: C58 - Financial Econometrics; Q40 - Energy: General; Q42 - Alternative Energy Sources

Suggested Citation

  • Muthe Mathias Mwampashi & Christina Sklibosios Nikitopoulos, 2026. "Beyond the Mean: Examining Electricity Spot Price Distribution in Australia," The Energy Journal, , vol. 47(2), pages 209-254, March.
    • Handle: RePEc:sae:enejou:v:47:y:2026:i:2:p:209-254
    DOI: 10.1177/01956574251369484
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    References listed on IDEAS

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    1. Forrest, Sam & MacGill, Iain, 2013. "Assessing the impact of wind generation on wholesale prices and generator dispatch in the Australian National Electricity Market," Energy Policy, Elsevier, vol. 59(C), pages 120-132.
    2. Mwampashi, Muthe Mathias & Nikitopoulos, Christina Sklibosios & Rai, Alan & Konstandatos, Otto, 2022. "Large-scale and rooftop solar generation in the NEM: A tale of two renewables strategies," Energy Economics, Elsevier, vol. 115(C).
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    4. Csereklyei, Zsuzsanna & Kallies, Anne & Diaz Valdivia, Andres, 2021. "The status of and opportunities for utility-scale battery storage in Australia: A regulatory and market perspective," Utilities Policy, Elsevier, vol. 73(C).
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    Keywords

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    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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