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Faculty of Economics

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Ritz, R. A.

How does renewables competition affect forward contracting in electricity markets?

CWPE1617

Abstract: Higher renewables penetration reduces the incentive of conventional electricity generators to make forward commitments via forward- or retail-market contracts. This can undermine the role of forward contracting in mitigating market power. More renewables raise wholesale electricity prices in states of the world where their capacity utilizaton is low due to intermittency.

Keywords: Electricity markets, renewable energy, forward contracting

JEL Codes: L13 L94 Q21 Q41

PDF: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1617.pdf

EPRG Paper Link: 1610

Open Access Link: https://doi.org/10.17863/CAM.5646