Impact of the Growing Penetration of Renewable Energy Production on the Iberian Long-Term Electricity Market

The increasing penetration of renewable energy sources in areas with wholesale energy markets may have significant impacts on the prices of electricity within these markets. These renewable energy sources typically have low or zero marginal prices and thus can bid into energy markets at prices which might be below plants using other generating technologies. This work seeks to understand the impact of these zero marginal cost plants in the Iberian Energy Market. This work makes use of an Artificial Neural Network (ANN) to evaluate the impact of growing renewable energy generation on the market-clearing price. Real data from the Iberian Energy Market is chosen and used to train the ANN. The scenarios used for renewable energy generation are taken from the newly published national energy and climate plans for both Spain and Portugal. Results show that increasing penetration of renewable energy leads to significant reductions in the forecasted energy price, showing a price decrease of about 23 € /MWh in 2030 compared to the baseline. Increasing solar PV generation has the largest effect on market prices.