Market premia for renewables in Germany: The effect on electricity prices
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Date
2020
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Abstract
Due to the growing share of ”green” electricity generated by renewable energy
technologies, the frequency of negative price spikes has substantially increased in
Germany. To reduce such events, in 2012, a market premium scheme (MPS) was introduced
as an alternative to feed-in tariffs for the promotion of green electricity. Drawing
on hourly day-ahead spot prices for the time period spanning 2009 to 2016 and
employing a nonparametric modeling strategy called Bayesian Additive Regression
Trees, this paper empirically evaluates the efficacy of Germany’s MPS. Via counterfactual
analyses, we demonstrate that the introduction of the MPS decreased the number
of hours with negative prices by some 70%.
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Keywords
egative electricity prices, Bayesian additive regression trees, merit order effect