Ring the Alarm! Electricity Markets, Renewables, and the Pandemic

Abstract

The pandemic's impacts on European electricity markets have been enormous, especially in countries with abundant low marginal costs of production like France. This article provides an in-depth quantitative study of the impacts of the crisis on the French electricity sector. During the first lockdown episode, France has experienced unparalleled reductions of electricity demand (-12%) and wholesale prices (-45%) resulting in gross revenue losses of 1.3 billion \EUR{} (-47%) for market participants. This paper argues that the observed market outcomes during the crisis are somehow indicative of outcomes in a future with abundant renewable power, where prices will fall in a more sustainable way.

Keywords: Energy Transition, COVID-19, Demand, Electricity Markets, Machine Learning

JEL Classification: L94, Q02, Q41, Q47