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Has renewable energy induced competitive behavior in the Spanish electricity market?

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  • Ciarreta, Aitor
  • Espinosa, Maria Paz
  • Pizarro-Irizar, Cristina

Abstract

Recent energy policy has favored a massive introduction of Renewable Energy Sources on electricity markets, which has greatly impacted their performance. First, the electricity price has decreased as a consequence of the so-called merit-order effect. Another relevant effect is associated to the intermittent nature of Renewable Energy, which has increased the cost of ancillary services. A third and important aspect, less addressed in the literature, is the induced change in the strategic behavior of the conventional electricity producers. In principle, the entry of new generators in a concentrated market would make it more competitive and change the strategic behavior of the incumbents. We test this hypothesis for the Spanish wholesale market. While we find no significant change in behavior for Nuclear, Hydropower and Coal, a change is observed in Combined Cycle bidding strategies after the entry of renewable generators. Our analysis shows that the massive entry of Renewable Energy Sources made other generators' behavior more competitive in the short run, but the effect was not persistent.

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  • Ciarreta, Aitor & Espinosa, Maria Paz & Pizarro-Irizar, Cristina, 2017. "Has renewable energy induced competitive behavior in the Spanish electricity market?," Energy Policy, Elsevier, vol. 104(C), pages 171-182.
    • Handle: RePEc:eee:enepol:v:104:y:2017:i:c:p:171-182
    DOI: 10.1016/j.enpol.2017.01.044
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    15. Kolb, Sebastian & Dillig, Marius & Plankenbühler, Thomas & Karl, Jürgen, 2020. "The impact of renewables on electricity prices in Germany - An update for the years 2014–2018," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
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    19. Álvaro González Lorente & Montserrat Hernández López & Francisco Javier Martín Álvarez & Javier Mendoza Jiménez, 2020. "Differences in Electricity Generation from Renewable Sources from Similar Environmental Conditions: The Cases of Spain and Cuba," Sustainability, MDPI, vol. 12(12), pages 1-18, June.
    20. John Jairo García Rendón, 2019. "Transición energética en Espana e integración de fuentes de energías no convencionales," Documentos de Trabajo de Valor Público 17788, Universidad EAFIT.
    21. Ruhang, Xu & Jia, Jia, 2023. "Towards reliability competition: Non-cooperative market mechanism under high variable renewable energy penetration," Applied Energy, Elsevier, vol. 331(C).
    22. Jingxiao Chen & Lei Zhang & Gaodan Deng, 2023. "Has the Wind Power Price Policy Promoted the High-Quality Development of China’s Wind Power Industry?—Analysis Based on Total Factor Productivity," Sustainability, MDPI, vol. 15(11), pages 1-19, May.
    23. Xue-Ting Jiang & Rongrong Li, 2017. "Decoupling and Decomposition Analysis of Carbon Emissions from Electric Output in the United States," Sustainability, MDPI, vol. 9(6), pages 1-13, May.
    24. Tampakis, Stilianos & Arabatzis, Garyfallos & Tsantopoulos, Georgios & Rerras, Ioannis, 2017. "Citizens’ views on electricity use, savings and production from renewable energy sources: A case study from a Greek island," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 39-49.
    25. Alcorta, Peio & Espinosa, Maria Paz & Pizarro-Irizar, Cristina, 2023. "Who bears the risk? Incentives for renewable electricity under strategic interaction between regulator and investors," Resource and Energy Economics, Elsevier, vol. 75(C).

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