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The impact of the integration of renewable energy sources in the electricity price formation: is the Merit-Order Effect occurring in Portugal?

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  • Macedo, Daniela Pereira
  • Marques, António Cardoso
  • Damette, Olivier

Abstract

This study investigates the relationship between wholesale electricity price behaviour and the integration of new renewable energy sources in the electricity system in Portugal. The research analyses two different samples, namely: the significant deployment of wind power versus the abrupt increase in the installed capacity of solar photovoltaic. Daily data from 2011 until 2019 and, a SARMAX/EGARCH approach has been conducted to assess the merit-order effect. The main results suggest that electricity production from wind power is decreasing the price of electricity but increasing its volatility. In addition, there is evidence for the leverage effect in electricity price.

Suggested Citation

  • Macedo, Daniela Pereira & Marques, António Cardoso & Damette, Olivier, 2020. "The impact of the integration of renewable energy sources in the electricity price formation: is the Merit-Order Effect occurring in Portugal?," Utilities Policy, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:juipol:v:66:y:2020:i:c:s0957178720300758
    DOI: 10.1016/j.jup.2020.101080
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