How does renewables competition affect forward contracting in electricity markets?

- Renewables weaken the incentive of conventional electricity generators to sell forward.
- This forward-contracting effect reduces the intensity of competition among incumbents.
- More renewable energy raises the wholesale price when its capacity utilization is low.
- Renewables may undermine the role of forward contracting in mitigating market power.

Higher renewables penetration reduces the incentive of conventional electricity generators to sell forward production. This can undermine the role of forward contracting in mitigating market power. More renewable energy raises wholesale electricity prices in states of the world where its capacity utilization is low due to intermittency.