The Impact of Solar Penetration on Solar and Gas Market Value: an application to the Italian Power Market
We assess the impact of solar penetration in the Italian wholesale electricity market on the market value of solar with respect to gas sources, measured as the ratio between the relative price they respectively earn and the average daily electricity price (value factor). We find that, on average, an increase of solar generation has a negative impact on the price earned by solar producers, thus causing a marginal departure from the grid parity condition. The relation between solar production and its market value is not constant over the years, while it depends on the degree of solar penetration. It is positive for very low levels of solar production while, as production increases, its marginal impact on the solar market value decreases and eventually becomes negative. An opposite relation is found when looking at the Gas market value. As solar displaces gas mainly during the peak-price hours, an initial solar penetration reduces the gas market value. However, as the solar share further increases, gas producers adapt their biding strategies. They switch production from the peak to the off-peak hours, where they exploit their temporary market power to increase the off-peak price. As a result, the relative price earned by gas producers is higher than the average daily price, increasing their market value with respect to renewable sources.
|Date of creation:||May 2014|
|Contact details of provider:|| Postal: Edifici Departamental Oriental, Campus dels Tarongers, Avda. dels Tarongers, S/N (4P15), 46022 - València|
Phone: 963 82 83 49
Fax: 963 82 83 54
Web page: http://www.estructuraeconomica.es
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Haas, Reinhard & Lettner, Georg & Auer, Hans & Duic, Neven, 2013. "The looming revolution: How photovoltaics will change electricity markets in Europe fundamentally," Energy, Elsevier, vol. 57(C), pages 38-43.
- Würzburg, Klaas & Labandeira, Xavier & Linares, Pedro, 2013.
"Renewable generation and electricity prices: Taking stock and new evidence for Germany and Austria,"
Elsevier, vol. 40(S1), pages 159-171.
- Klaas WŸrzburg & Xavier Labandeira & Pedro Linares, 2013. "Renewable Generation and Electricity Prices: Taking Stock and New Evidence for Germany and Austria," Working Papers fa03-2013, Economics for Energy.
- Brown, Sarah J. & Rowlands, Ian H., 2009. "Nodal pricing in Ontario, Canada: Implications for solar PV electricity," Renewable Energy, Elsevier, vol. 34(1), pages 170-178.
- Nick Johnstone & Ivan Haščič & David Popp, 2010. "Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(1), pages 133-155, January.
- Nick Johnstone & Ivan Hascic & David Popp, 2008. "Renewable Energy Policies And Technological Innovation: Evidence Based On Patent Counts," NBER Working Papers 13760, National Bureau of Economic Research, Inc.
- Richard Green and Nicholas Vasilakos, 2012. "Storing Wind for a Rainy Day: What Kind of Electricity Does Denmark Export?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
- Richard Green & Nicholas Vasilakos, 2010. "Storing Wind for a Rainy Day: What Kind of Electricity Does Denmark Export?," Discussion Papers 10-19, Department of Economics, University of Birmingham.
- de La Tour, Arnaud & Glachant, Matthieu & Ménière, Yann, 2013. "Predicting the costs of photovoltaic solar modules in 2020 using experience curve models," Energy, Elsevier, vol. 62(C), pages 341-348.
- Arnaud De La Tour & Matthieu Glachant & Yann Ménière, 2013. "Predicting the costs of photovoltaic solar modules in 2020 using experience curve models," Post-Print hal-01522961, HAL.
- Ramteen Sioshansi, 2011. "Increasing the Value of Wind with Energy Storage," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-30.
- Gelabert, Liliana & Labandeira, Xavier & Linares, Pedro, 2011. "An ex-post analysis of the effect of renewables and cogeneration on Spanish electricity prices," Energy Economics, Elsevier, vol. 33(S1), pages 59-65.
- Michael Smith & Johannes Urpelainen, 2014. "The Effect of Feed-in Tariffs on Renewable Electricity Generation: An Instrumental Variables Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(3), pages 367-392, March.
- Jensen, S. G. & Skytte, K., 2002. "Interactions between the power and green certificate markets," Energy Policy, Elsevier, vol. 30(5), pages 425-435, April.
- Woo, C.K. & Horowitz, I. & Moore, J. & Pacheco, A., 2011. "The impact of wind generation on the electricity spot-market price level and variance: The Texas experience," Energy Policy, Elsevier, vol. 39(7), pages 3939-3944, July.
- Milstein, Irena & Tishler, Asher, 2011. "Intermittently renewable energy, optimal capacity mix and prices in a deregulated electricity market," Energy Policy, Elsevier, vol. 39(7), pages 3922-3927, July. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eec:wpaper:1405. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vicente Esteve)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.