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Distributed energy generation techniques and the competitive fringe effect in electricity markets

descriptionPublicationkeyboard_double_arrow_right Article , Journal 01 Nov 2015 United Kingdom, Spain Publisher:Elsevier BVJournal:Resource and Energy Economics, volume 42, pages 125-140 (issn: 0928-7655,

Authors: Mulder, Machiel; Petrikaitė, Vaiva; Scholtens, Bert;

doi: 10.1016/j.reseneeco.2015.07.004

handle: 11370/748b9964-4255-4cc0-90b7-1f1313612e38 , 10261/125446 , 10023/11299

Distributed energy generation techniques and the competitive fringe effect in electricity markets

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Abstract

We analyse the impact of two different generation techniques used by fringe suppliers on the intensity of competition in the electricity wholesale market. For that purpose, we derive a Cournot model of this market taking into account long-term contracts, international trade and fringe suppliers using different energy generating technologies. We apply this model to the Dutch market and estimate the impact of fringe supply on the Lerner index. We find that the fringe supply coming from both intermittent wind generation and combined heat and power (CHP) plants operated by horticultural farmers increases competition, which leads to lower prices in the electricity market. However, this impact is relatively small. The effect per unit of intermittent wind electricity generation on competition and, therefore, prices is stronger than that of the CHP technology. (C) 2015 Elsevier B.V. All rights reserved.

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United Kingdom, Spain

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Keywords

HB Economic Theory, US, 330, EQUILIBRIA, HB, CHP, SPOT MARKET, 303, INDUSTRY, Fringe effect, OLIGOPOLY, Quantity competition, Very Good, Green technology, COURNOT, AUCTIONS, Wind energy

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