Why renewables will influence future electricity prices in Europe significantly

In recent years remarkable increases in renewable generation are taking place in several European countries, notably in Germany. In this chapter the historical growth, the current situation and the future prospects for renewable resources for electricity generation in Europe up to 2030 are analyzed. The core objective is to investigate the likely effects of a further uptake of electricity from renewables on the prices in European electricity markets and on their integration into the grid. The analysis is based on a fundamental approach and will build on data for RES from empirical monitoring on an hourly base. Moreover we use market prices from www.eex.de. The major effects of these developments on electricity markets will be: (i) a much higher price volatility from hour-to-hour and day-to-day; (ii) an increasing relevance of intra-day markets; (iii) higher costs for fossil plants due to higher shares of investment depreciation costs; (iv) increasing relevance of storages and “smart” grids, (v) higher shares for balancing markets; and (vi) the increased complexity in balancing supply and demand over time.