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Can the creation of separate bidding zones within countries create imbalances in PV uptake? : Evidence from Sweden

Fink, Johanna LU (2023) p.1-70
Abstract
This paper estimates how electricity price divergence within Sweden has affected incentives to invest in photovoltaic (PV) generation between 2016 and 2022 based on a synthetic control approach. Sweden is chosen as the research subject since it is together with Italy the only EU country with multiple bidding zones and is facing dramatic divergence in electricity prices between low-tariff bidding zones in Northern and high-tariff bidding zones in Southern Sweden since 2020. The results indicate that PV uptake in municipalities located north of the bidding zone border is reduced by 40.9-48% compared to their Southern counterparts. Based on these results, the creation of separate bidding zones within countries poses a threat to the expansion... (More)
This paper estimates how electricity price divergence within Sweden has affected incentives to invest in photovoltaic (PV) generation between 2016 and 2022 based on a synthetic control approach. Sweden is chosen as the research subject since it is together with Italy the only EU country with multiple bidding zones and is facing dramatic divergence in electricity prices between low-tariff bidding zones in Northern and high-tariff bidding zones in Southern Sweden since 2020. The results indicate that PV uptake in municipalities located north of the bidding zone border is reduced by 40.9-48% compared to their Southern counterparts. Based on these results, the creation of separate bidding zones within countries poses a threat to the expansion of PV generation and other renewables since it disincentivizes investment in areas with low electricity prices. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Working paper/Preprint
publication status
published
subject
keywords
N44, N54, N74, Q41, Q48, Sweden, Bidding Zone, Solar Energy, Electricity price
pages
70 pages
publisher
arXiv.org
DOI
10.48550/arXiv.2312.16161
language
English
LU publication?
yes
id
4f1a7148-52f2-4f0a-b479-468ede2fd2cc
date added to LUP
2024-01-16 10:45:47
date last changed
2024-01-16 16:30:27
@misc{4f1a7148-52f2-4f0a-b479-468ede2fd2cc,
  abstract     = {{This paper estimates how electricity price divergence within Sweden has affected incentives to invest in photovoltaic (PV) generation between 2016 and 2022 based on a synthetic control approach. Sweden is chosen as the research subject since it is together with Italy the only EU country with multiple bidding zones and is facing dramatic divergence in electricity prices between low-tariff bidding zones in Northern and high-tariff bidding zones in Southern Sweden since 2020. The results indicate that PV uptake in municipalities located north of the bidding zone border is reduced by 40.9-48% compared to their Southern counterparts. Based on these results, the creation of separate bidding zones within countries poses a threat to the expansion of PV generation and other renewables since it disincentivizes investment in areas with low electricity prices.}},
  author       = {{Fink, Johanna}},
  keywords     = {{N44; N54; N74; Q41; Q48; Sweden; Bidding Zone; Solar Energy; Electricity price}},
  language     = {{eng}},
  month        = {{12}},
  note         = {{Preprint}},
  pages        = {{1--70}},
  publisher    = {{arXiv.org}},
  title        = {{Can the creation of separate bidding zones within countries create imbalances in PV uptake? : Evidence from Sweden}},
  url          = {{http://dx.doi.org/10.48550/arXiv.2312.16161}},
  doi          = {{10.48550/arXiv.2312.16161}},
  year         = {{2023}},
}