Sensitivity of electricity prices in energy-only markets with large amounts of zero marginal cost generation

This paper explores the sensitivity of electricity prices in energy-only markets with large amounts of wind and solar power. After electricity prices have fallen in many energy-only markets in recent years, the topic has been discussed in many studies with different approaches. The approach in this paper is to perform extensive electricity market simulations. The study is based on the North European power system, and it was carried out using a generation planning model to create reasonable capacity mixes for future, and a unit commitment and economic dispatch model to simulate electricity prices. The results show that the amount of base load generation capacity and overcapacity has a very high impact on electricity prices. The share of wind and solar power and the price of CO
₂
also have a clearly detectable, but less significant, impact.