The merit-order effect in the Italian power market: The impact of solar and wind generation on national wholesale electricity prices

Clò, Stefano; Cataldi, Alessandra; Zoppoli, Pietro

doi:10.1016/j.enpol.2014.11.038

Cited by 294 publications

(122 citation statements)

References 13 publications

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“…The opposite is true for other renewable sources that supply the system continuously and thus they have the ability to shift the supply curve more often and cause the MOE. This is in agreement with Clò et al (2015) who finds different monetary savings of solar MOE and wind MOE (the former does not compensate for its incentives costs, the latter does).…”

Section: Discussionsupporting

confidence: 79%

“…In our case, e.g. the dispatching rule might be the cause (see Clò et al (2015) for a detailed discussion).…”

Section: Methodsmentioning

confidence: 99%

“…Thus, do benefits outweigh the costs? There are studies that claim that MOE off- sets the cost of subsidies like Dillig et al (2016) or McConnell et al (2013), there are also studies like Clò et al (2015) which distinguish between RES plants whose MOE counterbalances the costs of support (wind) and those that does not (solar) and finally there are studies such as Munksgaard and Morthorst (2008) that show that cost of subsidies are compensated by the MOE only to some extent. There is not a general agreement as the effect is always case specific reflecting market design, feed-in tariffs, rules and other conditions.…”

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confidence: 99%

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The merit order effect of Czech photovoltaic plants

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We assess the impact of photovoltaic power plants on the electricity supply curve in the Czech Republic. The merit order effect is estimated as the elasticity of electricity spot price with respect to change in supply of electricity from renewable sources. Data for the Czech electricity spot market from 2010 to 2015 are analyzed as this is the period with the steepest increase in a renewable generation capacity. The effect is estimated separately for solar and other renewable sources. We find a significant difference between these two groups. Our results show that based on hourly, daily and weekly data energy produced by Czech solar power plants does not decrease electricity spot price, creating double cost to the end consumer. However, the merit Order effect based on averaged daily and weekly data is shown to exist for other renewable sources excluding solar (mainly water and wind). This contributes to the conclusion that the Czech renewables policy that prefers solar to other renewable sources may be considered as suboptimal. Terms of use: Documents in

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Section: Discussionsupporting

confidence: 79%

“…In our case, e.g. the dispatching rule might be the cause (see Clò et al (2015) for a detailed discussion).…”

Section: Methodsmentioning

confidence: 99%

mentioning

confidence: 99%

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The merit order effect of Czech photovoltaic plants

2017

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“…Irrespective of the prevailing pricing mechanism, renewable penetration results in intermittency costs and generally reduces returns or leads to higher-than-anticipated prices for customers [28]. With that in mind, understanding the quantum of intermittency costs can avoid unexpected burdens on government budget or force abrupt rises in the price of electricity [4].…”

Section: Introductionmentioning

confidence: 99%

Adding solar PV to the Saudi power system: what is the cost of intermittency?

Elshurafa

Matar

2017

Energy Transit

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With 2015 as a reference year, we quantify the costs of solar photovoltaics (PV) intermittency and integration to power utilities in Saudi Arabia. We define intermittency costs as the costs of ramping and maintaining spinning reserves, while integration costs are defined as the costs of intermittency plus the costs of grid upgrades if they were needed. The operational facets of PV integration to grid operators will be more pronounced with higher PV penetration, so to focus on operation, we exclude capital costs. The cost of intermittency, excluding any benefits attained from PV operation, rises to 1.3 ¢/kWh of energy provided by PV at 20 GW of PV deployment. At low levels of penetration, renewables may impose negligible cost or even confer net benefits. However, above a certain level, costs will always outweigh benefits-what we refer to as the 'Operational Blend Wall'. It was found that the operational blend wall for Saudi Arabia was 11 GW, based on actual fuel costs prevailing in the period of study. The net financial effect of PV integration on operation, considering both costs of benefits, was an increase of 0.04 ¢/kWh and occurs at 20 GW of PV deployment. The maximum capacity of PV addition considered is 20GW, which represents a 25% penetration level within the power system.

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“…These sources are usually traded at zero marginal cost and their growing penetration is leading to a decrease of the prices in the day-ahead market [1]- [2]. Moreover, they can only be predicted with a limited accuracy, thus leading to real-time imbalances and increasing the need for balancing energy.…”

mentioning

confidence: 99%

Price-Taker Offering Strategy in Electricity Pay-as-Bid Markets

Mazzi

Kazempour

Pinson

2018

IEEE Trans. Power Syst.

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Abstract-The recent increase in the deployment of renewable energy sources may affect the offering strategy of conventional producers, mainly in the balancing market. The topics of optimal offering strategy and self-scheduling of thermal units have been extensively addressed in the literature. The feasible operating region of such units can be modeled using a mixed-integer linear programming approach, and the trading problem as a linear programming problem. However, the existing models mostly assume a uniform pricing scheme in all market stages, while several European balancing markets (e.g., in Germany and Italy) are settled under a pay-as-bid pricing scheme. The existing tools for solving the trading problem in pay-as-bid electricity markets rely on non-linear optimization models, which, combined with the unit commitment constraints, result in a mixed-integer non-linear programming problem. In contrast, we provide a linear formulation for that trading problem. Then, we extend the proposed approach by formulating a two-stage stochastic problem for optimal offering in a two-settlement electricity market with a pay-as-bid pricing scheme at the balancing stage. The resulting model is mixed-integer and linear. The proposed model is tested on a realistic case study against a sequential offering approach, showing the capability of increasing profits in expectation.

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The merit-order effect in the Italian power market: The impact of solar and wind generation on national wholesale electricity prices

Cited by 294 publications

References 13 publications

The merit order effect of Czech photovoltaic plants

The merit order effect of Czech photovoltaic plants

Adding solar PV to the Saudi power system: what is the cost of intermittency?

Price-Taker Offering Strategy in Electricity Pay-as-Bid Markets

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