Work detail

The Impact of German Renewable Electricity on Czech Electricity Spot Prices

Author: Mgr. Matěj Kouřílek,
Year: 2019 - summer
Leaders: doc. PhDr. Jozef Baruník Ph.D.
Work type: Finance, Financial Markets and Banking
Language: English
Pages: 83
Awards and prizes:
Abstract: Thesis investigates the impact of German wind and solar energy on the dynamics of Czech
electricity spot prices in the period between 2015 to 2018. Using pooled panel-GARCH
model, a negative merit order effect of German wind and solar energy were observed. More
specifically, one additional GW of power produced by wind and solar, reduces the spot price
by 0.60 and 0.45 EUR/MWh, respectively. The negative merit order effect was also found in
the case of Czech solar energy. Corresponding spot price reduction equals to 1.42 EUR/MWh
per additional gigawatt hour. Next, increased volatility in the spot prices was found due to
both German wind and Czech solar energy. I also observed that these effects differ during a
day. Furthermore, I estimated total financial impact stemming from the negative merit order
effect and compared it with the total costs of households that arise in surcharges to support
renewable energy. While Czech households pay approximately 270 million euros annually in
surcharges, the total financial impact stemming from the merit order is around 145 million
euros. The value comprises the merit order effect of both Czech and German renewable
sources. In other words, Czech and German households bear the costs of subsidized
renewable energy while they do not necessarily profit on the merit order effect. Only spot
market participants can make a profit on the negative merit order effect. It is up to national
policymakers to set rules which will not promote one part of customers above the other.




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