Beschreibung:
Across Europe, ambitions to further integrate solar and wind power plants into wholesale markets are increasing. Therefore, it becomes crucial to understand the dynamics of future markets with high shares of intermittent renewable energy. Since most renewables incur very low marginal costs, typically, their energy is offered for price bids near zero to wholesale markets. While aggregate effects of this behavior on markets (merit-order effect) and renewables’ profits (cannibalization effect) have been studied extensively, potential motives for deviations from this strategy still lack a thorough understanding. We theoretically derive optimal strategies of renewables receiving a market premium in a sequential wholesale market and empirically study actual price bids submitted by Spanish solar power producers in the Iberian electricity day-ahead market. Indeed, we observe some of them to submit price bids that are larger than zero and highly correlated with the intraday market price. Our theory suggests that they do so in order to exploit opportunities in sequential markets. Applying regression analyses to our dataset, we can provide evidence supporting this hypothesis