Impact of high market prices on renewables
This CEER Report aims to provide some insight into how high market prices affected supported RES in Europe. It seeks to determine whether there was the option for supported RES to leave any given support system, outline the structure of those support systems, and assess whether supported installations that left the support system during the high market price phase had the option to re-join the system later on. The paper also seeks to determine whether rules for renewable energy communities were already in place in 2022 and whether high market prices led to the support systems being adapted or changed.
Context and purpose
At the end of 2021, the electricity market prices started to rise significantly above previous thresholds. Support systems for renewables are based on the premises that the market cannot provide sufficient revenues for those installations and therefore additional money, whether through any form of premium, investment grants or other forms of support are needed.
The intention of this paper is to gather information on how the high market prices changed the situation for existing and new installations until the end of 2022.
Key findings
Based on the answers provided by the CEER NRAs, a very broad spectrum of effects from the high market prices can be observed. There was no uniform approach regarding the option to leave and/or re-join support systems. A majority responded that the high market prices led to a quicker deployment of RES installations. Roughly half of the Member Countries (MCs) reported a measurable impact of inflation and cost increase on the development of new RES installations, while the other half stated that there was no or little effect due to inflation and cost increases. Furthermore, around half of the MCs indicated that existing support systems were adapted due to inflation and cost increase. Adaptions range from not decreasing existing support levels to raising support levels for new installations.
There is no single “to-do” for MCs to adapt their support systems. Clear rules as to whether RES installations can or cannot leave the support system, and whether they can or cannot re-join after leaving are helpful. MCs should plan for contingencies such as higher-than-usual market prices, possibly through the implementation of (variations of) Contracts for Difference (CfDs). As such, negative prices should also be observed more closely.
Data collection
The information for this report was collected via a CEER survey conducted in 2023. The data reflects the status in the MCs on how support systems and possibly supported RES installations were affected by the step rise of market prices of electricity.
