Upon discussion of price setting on electricity wholesale markets, many refer to the so-called merit order model. Conventional wisdom holds that during most hours of the year, coal- or natural gas-fired power plants set the price on European markets. In this context, this paper analyses price...

Accurate information about electricity generation and consumption is crucial to power system modelling. Several institutions publish such data: for European countries these include the association of system operators ENTSO-E, the EU body Eurostat, and the International Energy Agency; for Germany...

Energy and climate policies are usually seen as measures to internalize externalities. However, as a side effect, these policies redistribute wealth between consumers and producers, and within these groups. While redistribution is seldom the focus of the academic literature in energy economics,...

The economics of electricity is shaped by its physics. A well known example is the non-storability of electricity that causes its price to fluctuate widely. More generally, physical constraints cause electricity to be a heterogeneous good along three dimensions - time, space, and lead-time....

The income that wind and solar power receive on the market is affected by the variability of their output. At times of high availability of the primary energy source, they supply electricity at zero marginal costs, shift the supply curve (merit-order curve) to the right and thereby reduce the...

Control power (regulating power, balancing power) is used to quickly restore the supply-demand balance in power systems. Variable renewable energy sources (VRE) such as wind and solar power are often thought to increase the reserve requirement significantly. This paper provides a comprehensive...

This paper estimates the welfare-optimal market share of wind and solar power, explicitly taking into account their output variability. We present a theoretical valuation framework that consistently accounts for output variability over time, forecast errors, and the location of generators in the...