Proceedings of the 70th International Academic Conference, Madrid

MODELLING ELECTRICITY PRICE DYNAMICS: IMPLICATIONS FOR LONG-DURATION ENERGY STORAGE AND POWER-TO-HYDROGEN SYSTEMS

ROBERTO PAREDES, LUCÍA ORTÍZ, MARÍA-PILAR MARTÍNEZ-HERNANDO, BLANCA CASTELLS, MARCELO F. ORTEGA, DAVID LEÓN

Abstract:

The expansion of variable renewable sources is affecting wholesale electricity markets, not only by reducing the average price but also by increasing the hours in which the prices are very near zero or negative. The evolution of the electricity price over time, as a consequence of the merit-order of the generation mix, is therefore essential when analysing the potential flexibility and storage applications, such as Power-To-X, that are economically viable with arbitrage opportunities in the future decarbonised electricity market. In this study, a multivariate multiple linear regression was used to generate hourly electricity prices in the scenario of a fully decarbonised power system, by considering its non-linear response to renewable sources' input to the Spanish market through the reduction of the merit-order, calendar effects, and time-varying trends. Parameters were estimated by OLS, after verifying the regression assumptions on the residuals. As heteroscedasticity and serial correlation were detected, inference relied on heteroscedasticity-consistent (HC0) standard errors, and the residual autocorrelation was accounted for through a first-order autoregressive model. Monte Carlo simulation techniques have been used to construct probabilistic scenarios of electricity prices defined by the PNIEC 2023-2030 and ELP 2050 roadmaps. A BIO-CAES storage system and a Power-To-H2 (PtH) conversion device, two electricity-price-dependent technologies, were then assessed using the generated price series in future highly decarbonised market conditions, specifically against electricity prices due to the impact of renewables, zero or negative price periods, and variation in price arbitrage opportunities. In a future highly decarbonised electricity system, a high penetration of renewables is responsible for increasing the number of hours with a very low, zero, or even negative price of electricity. BIO-CAES and PtH are financially attractive options for flexible systems. BIO-CAES is competitive below approximately 40 EUR/MWh, with cost-effectiveness being achieved during 80.9% and 95.8% of the hours in 2030 and 2050, respectively, thus ideal for the medium term and the limitation of renewable curtailment. PtH operates economically below approximately 24 EUR/MWh, with cost-effectiveness achieved during 66.3% and 89% of the hours in 2030 and 2050, respectively. BIO-CAES offers higher round-trip efficiency and operational flexibility, whereas PtH enables large-scale, seasonal storage and sector coupling. Together, they play complementary roles in enhancing system flexibility and reducing renewable curtailment. In summary, this study, combining the generated price scenarios for a highly decarbonised system and hybrid storage and hydrogen technology, has helped illustrate future technology synergy and sector coupling.

Keywords: Alternative Energy Sources; Energy Forecasting; Sustainable Development; Electric Utilities; Global Warming; Energy and Macroeconomy

DOI: 10.20472/IAC.2026.070.015

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