Powering Europe - European Wind Energy Association

independence and regional development, while helping
reduce greenhouse gas emissions, and electricity
prices.
Market dynamics prove that large amounts of wind
power lead to significant decreases in the average
wholesale power price level (known as the merit order
effect). But this only applies as long as wind power
reduces the need for conventional capacity, which
also depends on the expected power demand. In areas
where power demand is not expected to increase
very much and in areas where the amount of new deployment
of wind power is larger than the increase
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in power demand, wind energy will replace the most
expensive power plants. This will lower the prices in
these areas. Hence, the amount the price goes down
depends on the energy mix and the marginal technology
which will be replaced by wind power investments.
In wind and hydro-based systems (like in the Nordic
countries), prices decrease slightly more than in thermal
based systems. Additionally, the system’s connection
to neighbouring areas, as well as the availability
and use of transmission capacities also impacts the
effect wind power has on the price. Therefore, country
specific results on the average power price decrease
through increased wind power can vary considerably.
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