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Cannibalization, depredation, and market remuneration of power plants

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  • Peña, Juan Ignacio
  • Rodríguez, Rosa
  • Mayoral, Silvia

Abstract

The decarbonization strategy of the electricity sector relies on renewable energy. However, increasing renewables gives cannibalization and depredation effects. Cannibalization appears when increasing penetration of renewables undermines their own market remuneration. Depredation arises when increased renewable penetration undermines the market remuneration of other technologies. This paper documents cannibalization and depredation effects in the Spanish electricity market from 2014 to 2020. Increases in wind and solar penetration reduce market remuneration of all technologies. With wind, depredation and cannibalization effects are non-linear. Higher solar and wind penetration reduces remuneration volatility to wind, solar, and gas but increases those of coal and nuclear.

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  • Peña, Juan Ignacio & Rodríguez, Rosa & Mayoral, Silvia, 2022. "Cannibalization, depredation, and market remuneration of power plants," Energy Policy, Elsevier, vol. 167(C).
    • Handle: RePEc:eee:enepol:v:167:y:2022:i:c:s0301421522003111
    DOI: 10.1016/j.enpol.2022.113086
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    Cited by:

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    2. Diego Fernando Vargas-Sosa & Oscar Danilo Montoya & Luis Fernando Grisales-Noreña, 2023. "Efficient Integration of Photovoltaic Solar Generators in Monopolar DC Networks through a Convex Mixed-Integer Optimization Model," Sustainability, MDPI, vol. 15(10), pages 1-17, May.
    3. Rinne, Sonja, 2024. "Estimating the merit-order effect using coarsened exact matching: Reconciling theory with the empirical results to improve policy implications," Energy Policy, Elsevier, vol. 185(C).
    4. Milstein, I. & Tishler, A. & Woo, C.K., 2024. "The effect of PV generation's hourly variations on Israel's solar investment," Energy Economics, Elsevier, vol. 136(C).
    5. Kang Hua Cao & Han Qi & Chi-Keung Woo & Jay Zarnikau & Raymond Li, 2024. "Efficient Frontiers for Short-term Sales of Spot and Forward Wind Energy in Texas," The Energy Journal, , vol. 45(6), pages 37-60, November.
    6. Peña, Juan Ignacio, 2023. "The hedging effectiveness of electricity futures in the Spanish market," Finance Research Letters, Elsevier, vol. 53(C).
    7. K. H. Cao & H. Qi & C. K. Woo & J. Zarnikau & R. Li, 2024. "Efficient frontiers for short-term sales of spot and forward wind energy in Texas," Post-Print hal-04761181, HAL.

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    More about this item

    Keywords

    Cannibalization effect; Depredation effect; Renewable energy; Market remuneration;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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