A case study of the effect of increased renewable energy sources penetration and electricity market liberalization on retail electricity prices for households

Abstract

The policies implemented to enable and accelerate the energy transition have impacted most sectors of the EU economies, directly or indirectly. The present study focuses on the impact of the increasing penetration of renewable energy sources (RES) in the energy mix as well as the energy market deregulation on the retail electricity prices for households. More specifically, statistical data on retail electricity prices for households from 2008 to 2019 is analyzed. The study focused on Greece and Denmark, examining electricity prices for households against the share of RES in the energy mix for electricity, the impact of taxes and levies in electricity prices for households, and the effect of the electricity market transformation on the retail electricity prices. Despite the significant differences between the two countries in RES penetration, energy transition goals, the electricity market structure and retail prices, common trends have been identified both in the correlation between taxes and levies and RES penetration level, where a strong positive correlation has been identified, as well the in the role of competition in the retail markets where the strongly decreasing trend in wholesale electricity markets has no or very little effect on the retail price while the number of retailers shrinks or expands.