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.
