Bernard Chabot and Craig Morris on international merit order effect

It is a well known fact that larger penetration of renewable energy in Germany has reduced peak prices strongly, making it more difficult to run conventional fossil fuel power plants. They can’t just assume that they will find demand all year, reducing their capacity factors, which in turn adds to the levelized cost of energy. I blogged about this in April.

But Germany is connected to the European grid. And the European Union legislation has made sure that there is a common market for electricity.

That means that the merit order price reducing effect of more solar and wind capacity in Germany should happen at the European scale as well.

Now Bernard Chabot and Craig Morris have looked at recent data. Their preliminary result is that exactly this is happening.

I think  this is interesting and note this article here for further reference later on.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003,

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