Market‐Wide Impact of Renewables on Electricity Prices in Australia*

Abstract

This paper estimates the market‐wide impact of utility‐scale renewables on Australia's National Electricity Market (NEM) wholesale prices from 2009 to 2020. The goal is to understand the medium‐run impact of renewable generation, as opposed to the short‐run impact of weather‐driven changes in renewable output. The focus is, therefore, on the relationship between renewable generation (and its growth) and wholesale prices over a long period of time. In particular, we exploit the half‐hourly nature of wholesale price setting in the NEM to uncover the impact of solar and wind daily production on the distribution of prices throughout the day. In contrast to the merit‐order effect literature, which focuses on the short‐run (contemporaneous) impact of renewables, our results suggest that the total daily solar production has a positive, although not always significant, impact on wholesale prices throughout the day during an early development stage of solar generation. For a more recent period, following a substantive increase in utility‐scale solar generation, the results are more in line with the merit‐order effect literature with total daily solar production reducing wholesale prices for most of the day. This impact, however, is of several orders of magnitude lower than that predicted in the literature. We also show that the daily production of wind has a small negative impact on wholesale prices for most of the day, throughout the entire period of analysis.

Marginal Curtailment of Wind and Solar Pv: Transmission Constraints, Pricing and Access Regimes for Efficient Investment

“…In figure 2 the ratio of peak output (ignoring the top 1 4 of 1% or the top 22 hours to rule out extremes that vary from year to year) to the average is 3:1, which the linearized duration curve in figure 3 can replicate. Average curtailment, AC, is ( R  * 0 ( )) , but marginal curtailment, MC, caused by the entry of 1 MW of extra VRE capacity, is, after setting (   * ) = 0 from of Gonçalves and Menezes (2022) the impact of the Queensland REZ on market prices is very small -the 5-year average spot price reduces by about $0.30/MWh/GW (primarily wind, solar PV has an insignficant impact at the observed, low levels of penetration) and does not affect the optimal choice of VRE to install. The ratio of the marginal curtailment to average curtailment is MC/AC:…”

The impact of rooftop solar on wholesale electricity demand in the Australian National Electricity Market

“…Sensfuß et al (2008), Cardenas et al (2017), and Csereklyei et al (2019) document that increased adoption of intermittent renewable energy, including rooftop solar, is very likely to reduce wholesale electricity prices. 1 There are also related studies in the Australian context (Blakers et al, 2021;Gonçalves and Menezes, 2022;Srianandarajah et al, 2022). El-Adaway et al (2020) and Perez-Arriaga (2016) focus on the effect of energy transition and distributed energy resource penetration, while Quint et al (2019) review various challenges resulting from distributed energy resources.…”