Impact of growing renewable energy sources on electricity market prices: Case of Germany

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URL

Journal Title

Journal ISSN

Volume Title

School of Business | Master's thesis

Authors

Date

2024

Department

Taloustieteen laitos

Major/Subject

Mcode

Degree programme

Economics

Language

en

Pages

58 + 5

Series

Abstract

This thesis examines the impact of growing renewable energy sources (RES) on electricity market prices in Germany, focusing on wind and solar power. The study employs a combination of empirical analysis and literature review to explore how the integration of RES has influenced market dynamics, particularly through the merit order effect (MOE). Using data from 2019 and 2023, the reduced-form regression analysis reveals that increased wind and solar generation significantly reduces wholesale electricity prices and displaces traditional fossil fuel-based generation, such as lignite and gas. The findings underscore the importance of adaptive market mechanisms to maintain grid stability and the economic viability of conventional power plants. The study concludes that while RES integration presents chalenges, it offers substantial benefits in reducing greenhouse gas emissions and lowering electricity prices, supporting continued expansion of renewable energy.

Description

Thesis advisor

Vehviläinen, Iivo

Keywords

renewable energy sources, merit order effect, electricity prices, price effect, replacement effect

Other note

Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-202408185508

Collections

[gradu] Kauppakorkeakoulu / BIZ