An econometric analysis of the electricity price : And a further analysis on the deciding factors for increased renewable energy

Abstract: The aim with this thesis is to investigate various variables that are pre-assumed to be of importance of the electricity price. With econometric analysis estimation on their influence of the electricity price are made. This is important when consider the electricity market and its future challenges towards renewable energy that are intermittent energy. The market and supply primarily need to consider the competitiveness, the environmental impact from the production of the electricity and delivery. These three consideration depend on which energy that are evaluated which means that instruments to achieve different goals are needed. The results from the econometric analysis is that the included variables have a significant impact of the electricity price. Rainfall and nuclear power produce about 80 percent of the electricity. Temperature and fossil fuel are of importance as well, during periods with stricter weather conditions it is demanded more electricity for our households and the continuously match of supply and demand at the market sometimes requires coal as input good for production of electricity. The increased renewable energy, also give some explanation towards increased fossil fuel combustion when supply becomes insufficient. But increased wind and solar also increase the supply of electricity with a lower cost of production compared to coal and nuclear power. Earlier studies have estimated that a decreased electricity supply from nuclear power will affect the price negative which means that the price of electricity will increase. In this thesis that assumption is a strong assumption and the suggestion is that it depend on the development of new hydro, wind and solar power proceed.