The crowding out of conventional electricity generation by renewable energy sources : implications from Greek, Hungarian, and Romanian electricity markets

Halužan, Marko (author), Verbič, Miroslav (author), Zorić, Jelena (author)

To achieve ambitious energy-climate targets, all EU member states have introduced policies to support the market introduction of renewable energy sources (RES) generation. Motivated to close the gap of the merit order effect (MOE) in less mature Central and South East European electricity markets, we empirically confirm economic theory predictions that in the short run, an increase in RES generation reduces electricity prices. The merit order effect is initially econometrically confirmed and quantified. Different econometric model specifications are estimated to differentiate the MOE caused by wind and solar generation and to differentiate the MOE on high-load and low-load days. In addition, we simulate the adjustment of the realised day-ahead electricity prices to the no-RES generation scenario. Modern statistical methods are applied to bridge the gap in the limited public data availability to solve simulation models used in the power system or agent-based simulations. A family of data mining algorithms is applied for the merit order estimation used in the dynamic adaptation of the generation mix to the omitted RES generation. The estimated energy imbalance caused by the excluded RES generation is therefore compensated by the additional conventional generation dispatch according to the estimated power plant merit order. The estimated supply curves for each generation technology assist the reasoning behind the established MOE in econometric models. Based on our findings, policymakers should prioritise policies that facilitate the integration of RES into their electricity markets, which would in turn accelerate energy transition. With increasingly growing shares of renewables in the system, the governments need to rethink the support scheme, where the emphasis should be placed on efficiently integrating renewables in the power system by taking into account temporal and spatial dimensions.

• Language: English
• Keywords: Greece, Hungary, Rumania, electroenergetics, sustainable development, renewable energy sources, merit order efect, data mining, day-ahead electricity prices, Central and South East Europe
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: Published
• Publication version: Version of Record
• Year: 2023
• Number of pages: Str. 120063–120084
• Numbering: Vol. 30, iss. 57
• PID: 20.500.12556/RUL-152739
• UDC: 502.131.1
• ISSN on article: 0944-1344
• DOI: 10.1007/s11356-023-30564-y
• COBISS.SI-ID: 171359235
• Publication date in RUL: 05.12.2023

Record is a part of a journal

• Title: Environmental science and pollution research
• Shortened title: Environ. sci. pollut. res. int.
• Publisher: Springer Nature
• ISSN: 0944-1344
• COBISS.SI-ID: 2640249

Licences

• License: CC BY 4.0, Creative Commons Attribution 4.0 International
• Link: http://creativecommons.org/licenses/by/4.0/
• Description: This is the standard Creative Commons license that gives others maximum freedom to do what they want with the work as long as they credit the author.

Secondary language

• Language: Slovenian
• Keywords: Grčija, Madžarska, Romunija, elektroenergetika, trajnostni razvoj