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Renewable Energy and Electricity Prices in Spain

  • Liliana Gelabert

    ()

    (Instituto de Empresa)

  • Xavier Labandeira

    ()

    (Rede, Facultade de CC. EE. (Universidade de Vigo) and Economics for Energy)

  • Pedro Linares

    ()

    (Universidad Pontificia Comillas, ETS Ingeniería ICAI and Economics for Energy)

Growing concerns about climate change and energy dependence are driving specific policies to support renewable or more efficient energy sources in many regions, particularly in the production of electricity. These policies have a non-negligible cost, and therefore a careful assessment of their impacts seems necessary. In particular, one of the most-debated impacts is their effect on electricity prices, for which there have been some ex-ante studies, but few ex-post studies. This article presents a full ex-post empirical analysis, by looking at use of technologies and hourly electricity prices for 2005-2009 in Spain, to study the effects that the introduction of renewable electricity and cogeneration has had on wholesale electricity prices. It is particularly interesting to perform this study in Spain where an active system of public support to renewables and cogeneration has led to a considerable expansion of these energy sources and electricity pricing is at the centre of intense debate. The paper reports that a marginal increase of 1 GWh of electricity production using renewables and cogeneration is associated with a reduction of almost 2 € per MWh in electricity prices (around 4% of the average price for the analyzed period).

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File URL: http://www.eforenergy.org/docpublicaciones/documentos-de-trabajo/WP01-2011.pdf
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Paper provided by Economics for Energy in its series Working Papers with number 01-2011.

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Length: 26 pages
Date of creation: Mar 2011
Date of revision:
Handle: RePEc:efe:wpaper:01-2011
Contact details of provider: Web page: http://www.eforenergy.org

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  1. Linares, P. & Santos, F.J. & Pérez-Arriaga, I.J., 2008. "Scenarios for the evolution of the Spanish electricity sector: Is it on the right path towards sustainability?," Energy Policy, Elsevier, vol. 36(11), pages 4057-4068, November.
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