Integration of non-conventional renewable energy and spot price of electricity: A counterfactual analysis for Colombia

Energy transition is prevalent nowadays, and Colombia is no exception to this phenomenon. Energy coming from non-conventional renewable resources is one of the main feature of this phenomenon. Consequently, this paper evaluates the impact of this new kind of renewable energy resource in the Colombian wholesale electricity market. This evaluation uses a counterfactual scenario based on a structural model of an energy firm's behavior that offers 1000 MW in 2018. Our results suggest that the spot price decreases on average 12.75 COP$/kWh (4.31 US$/MWh) per day. We find that 6.75 COP$/kWh (2.28 US$/MWh) is due to the firms' strategies, and 6 COP$/kWh (2.03 US$/MWh) is a merit order effect. (c) 2020 Elsevier Ltd. All rights reserved.