Baseload plants such as coal and nuclear are hit particularly hard by
reduced wholesale electricity prices as they have low fuel costs and so don't save much money by shutting down or reducing output on sunny days.
In addition to driving more renewables and reducing emissions, an increased RPS policy can
reduce wholesale electricity prices, act as a hedge against high, volatile natural gas prices, and add up to 3,000 jobs per year.
(Renewables are also
reducing wholesale electricity prices, though not necessarily the full cost of electricity, because they still depend on subsidies and mandates that don't show up in wholesale prices.)
Why does renewable energy
reduce wholesale electricity prices?
Not exact matches
Given the right financial incentives, though, many households may accept smart grid strategies that let utilities
reduce power consumption in homes at peak periods of demand, when
wholesale electricity prices are highest, some analysts conclude.
A Fraunhofer Institute study found that thanks to the merit order effect, solar PV
reduces average German
wholesale electricity prices around 10 percent and peak
prices up to 40 percent.
Wholesale electricity prices this week in Queensland have fallen below $ 30 / MWh — see graph below — far below the levels of other states as mild weather and sunny condition
reduced demand and generated a large amount of solar
electricity.
Federal Coalition politicians have hinted darkly that this «indivisibility» hides AGL's true intent to boost the
wholesale electricity price for Bayswater (and all other generators) by
reducing supply when Liddell's generators grind to a halt for the last time.
In fact there is good evidence that renewable energy is
reducing the
wholesale price of
electricity.
This point of use solar capacity
reduces demand for grid
electricity and so
reduces the
wholesale price as lower demand results in lower
prices.
A plant may retire if higher coal
prices, lower
wholesale electricity prices (often tied to natural gas
prices), or
reduced utilization make investment in equipment like scrubbers uneconomical.
This cuts
wholesale electricity prices, which
reduces (non-wind) generator profits, but benefits consumers.
Reduced demand effectively creates an oversupply in the market, bringing down
wholesale electricity prices and eating into the profits of generators and retailers.