Javier López Prol

Increasing penetration of zero marginal cost variable renewable technologies cause the decline of wholesale electricity prices due to the merit-order effect. This causes a “cannibalization effect” through which increasing renewable technologies’ penetration undermines their own value. We calculate solar and wind daily unit revenues (generation weighted electricity prices) and value factors (unit revenues divided by average electricity prices) from hourly data of the day-ahead California wholesal

Having achieved grid parity, photovoltaic (PV) self-consumption will play a key role in the transition to a low-carbon energy system. Spain, whilst among the EU countries with highest solar irradiation, has recently passed one of the most restrictive self-consumption regulations. We study the implications of this regulation in comparison with alternatives (net metering, net billing) on the profitability (internal rate of return) of potential residential, commercial and industrial investors, as w

As COVID-19 spreads worldwide, governments have been implementing a wide range of measures to contain it, from movement restrictions to economy-wide shutdowns. Understanding their impacts is essential to support better policies for countries still experiencing outbreaks or in case of emergence of subsequent pandemic waves. Here we show that the cumulative decline in electricity consumption within the 5 months following the stay-home orders ranges between 3% and 12% in the most affected EU countr

Whereas Spain used to have one of the most restrictive photovoltaic self-consumption (PVSC) regulations in the world, the new regulation (RD-L 15/2018 & RD 244/2019) improves the economic conditions of PVSC systems, simplifies administrative procedures and allows shared self-consumption. We analyze the impact of the new PVSC regulation on residential, commercial and industrial prosumers’ profitability (internal rate of return). We provide a wide range of results that allow us to explore future p

The transformation of the electricity sector is a central element of the transition to a decarbonized economy. Conventional generators powered by fossil fuels have to be replaced by variable renewable energy (VRE) sources in combination with electricity storage and other options for providing temporal flexibility. We discuss the market dynamics of increasing VRE penetration and its integration in the electricity system. We describe the merit-order effect (the decline of wholesale electricity pri

The literature on the risk-return performance of equity portfolios depending on their ESG score is mixed. While most studies use some variant of Fama-French, we optimize equity portfolios of the NYSE between 2018-2019 according to the Markovitz mean-variance framework depending on their ESG scores to better reflect the behavior of financial agents. We then systematically analyze the optimal and efficient portfolio performance and find that high ESG portfolios have lower volatility and even lower

Although both Germany and Spain were pioneers in the support and adoption of photovoltaics (PV) through Feed-In Tariffs (FiTs), Germany is the world's leading country in terms of installed PV capacity per capita and remains on a path of PV growth while the Spanish PV market is virtually paralysed. We analyse the divergent performance in both countries by reviewing the evolution of FiTs and by analysing the profitability of different types of installations for the period 2004–2014. While in Germa

Climate change and geopolitical risks call for the rapid transformation of electricity systems worldwide, with Europe at the forefront. Wind and solar are the lowest cost, lowest risk, and cleanest energy sources, but their variability poses integration challenges. Combining both technologies and integrating regions with dissimilar generation patterns optimizes the trade-off between maximizing energy output and minimizing its variability, which respectively give the lowest levelized cost and low

As variable renewable energy (VRE) sources like wind and solar increase their penetration in electricity markets, their production has to be curtailed more often due to overproduction, system inflexibility or grid congestion. Curtailment entails a higher levelized cost per unit of usable electricity and could therefore hamper the further diffusion of VRE. We study the effects of variable (wind and solar) and inflexible (nuclear) penetration and demand on hourly VRE curtailment in California (CAI

While Germany has led the market in photovoltaic (PV) implementation throughout the last decade, there has been increasing criticism of PV support policies due to their high cost. Although declining, the levelized cost of electricity (LCOE) from PV is still above the German wholesale electricity price. However, using LCOE as an evaluation yardstick falls short in at least 2 respects: It neither takes into account integration costs rising with PV penetration (ie, undervaluing its actual cost) nor

Electrification of all economic sectors and solar photovoltaics (PV) becoming the lowest-cost electricity generation technology in ever more regions give rise to new potential gains of trade. We develop a stylized analytical model to minimize unit energy cost in autarky, open it to different trade configurations, and evaluate it empirically. We identify large potential gains from interhemispheric and global electricity trade by combining complementary seasonal and diurnal cycles. The correspondi

Climate change and geopolitical risks call for the rapid transformation of the European electricity system. Wind and solar are the lowest cost and risk, and the cleanest energy sources, but their variability poses integration challenges. Combining both technologies and integrating regions with dissimilar generation patterns optimizes the trade-off between maximizing capacity factor and minimizing output variability, which respectively give the lowest levelized cost and lowest integration cost. W

Photovoltaic self-consumption (PVSC) is a central element of the energy transition. However, retail electricity tariffs have not adapted to the emerging phenomenon of demand-side generation. We introduce the concept of profitability landscapes to evaluate the effects of a cost-reflective retail tariff and a competitive PVSC regulation on prosumers’ returns depending on system costs and self-consumption share. The trade-off between these two elements reveals the value of demand flexibility. We fi

The transformation of the electricity sector is a main element of the transition to a decarbonized economy. Conventional generators powered by fossil fuels have to be replaced by variable renewable energy (VRE) sources in combination with electricity storage and other options for providing temporal flexibility. We discuss the market dynamics of increasing VRE penetration and their integration in the electricity system. We describe the merit-order effect (decline of wholesale electricity prices a