Econonomics of Energy and Environmental Policy

Article Details

Eyes on the Price: Which Power Generation Technologies Set the Market Price?

Abstract:
Upon discussion of price setting on electricity wholesale markets, many refer to the so-called merit order model. Conventional belief 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 setting on European power markets. We use a fundamental electricity market model of interconnected bidding zones to determine hourly price-setting technologies for 2020. We find a price-setting pattern that is more complex and nuanced than the conventional belief suggests: across all researched countries, coal- and natural gas-fired power plants set the price for only 40 per cent of all hours. On some markets, the price setting is characterised by a high level of interconnectivity—as illustrated by the example of the Netherlands. During some 75 per cent of hours, foreign power plants set the price on the Dutch market.
Download PDF
Executive Summary: View

Keywords: Price Setting, Electricity Markets, Merit Order, Generation Technologies

DOI: 10.5547/2160-5890.10.1.eblu


View References


Published in Volume 10, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.


 

© 2025 International Association for Energy Economics | Privacy Policy | Return Policy