Martyn Rhisiart Jones

Düsseldorf, NRW, 5th November 2025

1. Merit-Order Effect: Renewables Slash Wholesale Prices

Zero-marginal-cost generation (from wind/solar) displaces expensive gas/coal plants, thereby lowering the market-clearing price.

Study	Scope	Key Finding	Source
IMF (2023)	24 EU countries, 2014–2021	+1% variable renewables → −0.6% wholesale price	IMF Working Paper 23/34
EEA (2024)	EU-27, 2022–2023	Wind/solar saved €100 billion in fossil fuel costs	EEA Report 05/2024
Fraunhofer ISE (2024)	Germany	40%+ wind/solar → wholesale halved from €500/MWh (2022) to €74/MWh (2024 avg)	Fraunhofer ISE

• How it works: In energy-only markets (most of Europe, Australia, US), plants bid in order of marginal cost. Wind/solar bid €0 → push gas (€100–300/MWh) down the curve → lower clearing price for all.
• 2023 EU example: Without 13% YoY wind/solar growth, wholesale prices would’ve been 15% higher.

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2. LCOE Collapse: Wind & Solar Now Cheapest New Power

Levelized Cost of Energy (LCOE) = total lifetime cost ÷ total energy produced.

Technology	2010 LCOE ($/MWh)	2023 LCOE ($/MWh)	% Drop	Source
Onshore Wind	80–100	30–50	−60%	Lazard v16
Utility Solar PV	250–300	30–60	−85%	Lazard v16
Offshore Wind	180–220	70–100	−60%	Lazard
Gas (CCGT)	60–80	60–110 (volatile)	—	IEA
Coal	80–100	100–150	—	IEA

• Lazard (2023): Wind & solar cheapest unsubsidized new-build in 90%+ of global markets.
• BNEF (2024): Solar module prices −30% in 2023 alone → LCOE now < $20/MWh in sunny regions.

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3. Retail Price Trends in High-Penetration Markets

Short-term volatility, long-term savings.

Focus	Variable RE Share (2024)	Wholesale Trend	Retail Price Trend	Notes
D	42% (wind + solar)	Daytime prices are negative 30% of days	↓ −7% YoY (2024)	EEG levy adds ~7 ct/kWh, but falling wholesale dominates
DK	60% (mostly wind)	Negative prices 100+ hours/yr	Stable high (~30 ct/kWh)	High taxes, strong exports
AUS	35%+	Daytime prices negative 30% of days	↓ −15% in SA/NSW (2024)	Rooftop solar boom
CA, USA	35% solar + wind	Duck curve → negative midday prices	↓ −10% avg since 2020	CAISO data

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4. System-Level Cost Studies (Long-Term Projections)

Integrating grid, storage, and flexibility — still cheaper than fossils.

Source	Scenario	Savings by 2030/2050
IEA Net Zero (2024)	70% renewables by 2030	20–30% lower system cost vs. fossil path
IRENA (2023)	90% renewables by 2050	$12 trillion global savings vs. BAU
Lazard + Enel (2023)	80% RE grid (with 4-hr storage)	LCOE $50–70/MWh → cheaper than gas at $80/MWh

• Storage is key: 4-hour lithium batteries now $130/kWh (BNEF 2024), down 90% since 2010 → grid-scale storage < $50/MWh by 2030.
• Grid upgrades pay off: EU needs €600B by 2030 — but saves €2.5T in fuel by 2050 (ENTSO-E).

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5. Real-World Proof: Countries That Did It

Country	RE Share	Electricity Price (2024)	Notes
Norway	98% (90% hydro + wind)	€0.05–0.08/kWh	Exports surplus
Brazil	85% (hydro + growing solar/wind)	~ $0.10/kWh	Cheap, reliable
New Zealand	85% (hydro + geothermal + wind)	$0.12–0.18/kWh	Stable

→ High renewables ≠ high prices when you have hydro, storage, or smart grids.

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Countering the “Integration Costs” Myth

• Yes, wind/solar need backup, storage, grids → €5–15/MWh added at 40% penetration (IEA).
• However, gas plants require fuel price risk (€50–300/MWh fluctuations). Renewables lock in €30–50/MWh for 25+ years.
• Net: System cost falls above 30–40% penetration (Fraunhofer, 2023).

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Bottom Line

Short-Term (0–30% RE)	Long-Term (40%+ RE)
Volatility ↑, subsidies ↑	LCOE ↓, fuel risk ↓, prices ↓
Grid strain	Storage + flexibility = stable, cheap power

Verdict: Variable renewables cut costs long-term — proven by LCOE, merit-order savings, and real markets.

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Key Sources (Verify Yourself)

1. Lazard LCOE v16: lazard.com/research-insights
2. IEA World Energy Outlook 2024: iea.org/weo
3. IRENA Renewable Power Generation Costs 2023: irena.org/publications
4. IMF Working Paper 23/34: imf.org
5. EEA Briefing 05/2024: eea.europa.eu

Build more wind. Add storage. Watch bills fall.