Variable renewable energy technologies in the Turkish electricity market: Quantile regression analysis of the merit-order effect

Sirin S. M., Yilmaz B. N.

Energy Policy, vol.144, 2020 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 144
  • Publication Date: 2020
  • Doi Number: 10.1016/j.enpol.2020.111660
  • Journal Name: Energy Policy
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, PASCAL, ABI/INFORM, Aerospace Database, Agricultural & Environmental Science Database, Business Source Elite, Business Source Premier, CAB Abstracts, Communication Abstracts, Compendex, EconLit, Environment Index, Geobase, Greenfile, Index Islamicus, INSPEC, PAIS International, Pollution Abstracts, Public Affairs Index, Veterinary Science Database, Civil Engineering Abstracts
  • Keywords: Merit-order effect, Renewable, Turkey, Quantile regression, WIND POWER, ORGANIZING MAPS, PRICES, GENERATION, SCALE, INTERMITTENT, INTEGRATION, WHOLESALE, POLICY, TIME
  • Middle East Technical University Affiliated: Yes

Abstract

© 2020 Elsevier LtdThe share of variable renewable energy sources in power supply has increased significantly in many countries; however, this increase has also created problems in electricity markets. While the average day-ahead market price has declined in several markets (the merit-order effect), the remuneration mechanisms in some countries have to be revised due to the surge in financial costs. Yet, further research is needed to understand the implications of the merit-order effect for remuneration mechanisms thoroughly. Accordingly, this study aims to contribute to the literature through employing a quantile regression model to analyze the merit-order effect and discuss its implications for the remuneration mechanism in Turkish electricity market. Model results show significant negative merit-order effect for both wind and run-of-river hydro technologies; however, this effect varies with respect to demand, price level and technology. Moreover, the contribution of these technologies to the total welfare in the Turkish electricity market does not favor fixed-price payments. In conclusion, it is recommended that the remuneration mechanism is revised to include the temporal value of variable renewable energy sources and electricity market design should reflect the locational value of variable renewable energy sources in Turkey.