Exploring the 'merit order effect'

The new literature review, prepared for EWEA by energy consultants Pöyry, shows that adding wind energy into the power mix has a significant influence on the resulting price of electricity - the so-called merit order effect (MOE) - whilst at the same time reducing CO2 emissions. The literature review brings together, for the first time, the findings of case-studies in Germany, Denmark and Belgium.

Click here to download the full report in PDF.

This is a factoid that I've been pushing here on ET for close to 2 years, and which I have lobbied EWEA to publicize more; I don't know if this publication is linked to my efforts, but I'll claim credit anyway!

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What this means is that the "cost" of the subsidy (which, btw, is borne by electricity users, not by tax payers, so the budget restrictions  argument is bunk) needs to be reduced by the merit order effect, ie the lower power prices, for consumers caused by the injection of zero-marginal-cost renewables in the system...

Wind power