Distributed energy generation techniques and the competitive fringe effect in electricity markets
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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.
Mulder , M , Petrikaitė , V & Scholtens , B 2015 , ' Distributed energy generation techniques and the competitive fringe effect in electricity markets ' Resource and Energy Economics , vol In press . DOI: 10.1016/j.reseneeco.2015.07.004
Resource and Energy Economics
Copyright © 2015 Published by Elsevier B.V. This work is made available online in accordance with the publisher’s policies. This is the author created, accepted version manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://dx.doi.org/10.1016/j.reseneeco.2015.07.004
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