Power Price Stability and the Insurance Value of Renewable Technologies

Join our climaTRACES Lab workshop

Speaker: Daniel Navia, Senior Economist, World Bank

Do renewables stabilise electricity prices or amplify volatility? This paper simulates European power markets under 2030 National Energy and Climate Plans while preserving historical variability in demand, fossil fuel prices and weather conditions. It introduces a β-sensitivity metric capturing how average annual electricity prices respond to gas price shocks. The results show that expanding renewables substantially dampens price spikes, with β-sensitivity falling sharply as solar and wind penetration rises. These stabilisation effects generate sizable welfare gains, highlighting the insurance value of renewable energy in increasingly volatile energy systems.

The weekly climaTRACES workshops, organised by Kamiar Mohaddes and Henning Zschietzschmann, are attended by a diverse group of people from economics, geography, politics, engineering, business, earth sciences, natural sciences and history, generating interdisciplinary discussion. One person leads the session, on either a paper they have written, a work in progress or just an idea they have and would like feedback on. This is also an opportunity for people to find our more about the team on what climaTRACES have been up to and what future events and research projects are being developed.

No registration required

You can join us virtually on Zoom.

No registration required. If you have any questions about this seminar, please email Henning Zschietzshmann.