Increasing solar photovoltaic and wind generation capacity beyond European 2030 targets could make electricity prices more stable, with reductions in sensitivity to fluctuations in the price of natural gas possibly outweighing the increasing influence of weather effects.
Since wind and solar power have no fuel cost, they push the price down by replacing more expensive fuel-consuming power plants. As wind and solar gradually become the primary power supply sources, market prices will drop on average, but price variations are likely to increase.
The price of steel, the main construction material for both utility-scale PV and onshore wind plants, increased 75% in China, 160% in the United States and 270% in Europe, while copper and aluminium became 60-80% more expensive. The highest growth was in freight rates, which rose almost sixfold.
For simplicity, in this model Δ pf, d, λ w, e are assumed to be uncorrelated, so that the variance of electricity price (changes) is just the contribution of the variability of fuels and the variability of weather, in both cases considering the sensitivity to each of these factors, plus the variability of the other, unspecified, factors.
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