Intermittently renewable energy, optimal capacity mix and prices in a deregulated electricity market

• This paper assesses the effect of intermittently renewable energy on generation capacity mix and market prices. • We consider two generating technologies: (1) conventional fossil‐fueled technology such as CCGT and (2) sunshine‐dependent renewable technology such as photovoltaic cells (PV). • Using real‐world data for Israel, we confirm that the introduction of PV technology amplifies price volatility. • A large reduction in PV capacity cost increases PV adoption but may also raise the average price.