Title: Evaluating the strategic supply per power plant: evidence from the Spanish wholesale electricity market

Authors: Victor Manuel Ferreira Moutinho; António Carrizo Moreira; Jorge Humberto Mota

Addresses: DEGEI, University of Aveiro, Campus Universitário de Santiago, Aveiro 3810-193, Portugal; CEFAGE, University of Évora, Portugal ' DEGEI, GOVCOPP, University of Aveiro, Campus Universitário de Santiago, Aveiro 3810-193, Portugal ' DEGEI, University of Aveiro, Campus Universitário de Santiago, Aveiro 3810-193, Portugal

Abstract: This paper analyses the relationship among marginal costs per power plant, fossil fuel prices and electricity bidding quantities in the Spanish electricity market. The results of the panel cointegration and Granger causality methods clearly indicate a differential impact of fossil fuel prices on power plants marginal costs, with a positive effect for gas power plants. The biggest negative impact on marginal costs is seen for coal technology. As a consequence of the characteristics of different production technologies, the set of marginal costs across the sample is based on coal power plants, although Endesa and Iberdrolas marginal costs are predominantly based on gas power plants. Operating costs for hydroelectric power plants are very low when compared to the thermal power plants, which is the base technology used by Endesa, since this technology is strongly dependent on the volatility of commodity markets and on the supply chain and production costs management.

Keywords: fossil fuel prices; capacity generation; power plant marginal costs; panel cointegration; electricity bidding quantities; Spain; electricity markets; gas power plants; coal power plants; hydroelectric power plants; thermal power plants; operating costs.

DOI: 10.1504/IJETP.2015.069807

International Journal of Energy Technology and Policy, 2015 Vol.11 No.2, pp.97 - 126

Received: 05 Feb 2014
Accepted: 23 Jan 2015
Published online: 12 Jun 2015 *

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