CHANGES IN DEMAND AND SUPPLY IN THE ALTERNATIVE ENERGY MARKET (USING THE EXAMPLE OF SOLAR ENERGY) OF THE EUROPEAN UNION

Abstract

The study is devoted to the econometric analysis of the solar energy market situation in the European Union countries over the past decade. The purpose of the work is to theoretically substantiate and empirically verify the relationship between long-term contract prices for solar electricity and the volumes of its consumption and production. The relevance of the chosen topic is due to the urgent need of the EU member states to rapidly expand renewable generation to achieve climate goals and strengthen energy security. The least squares method was used to construct two linear regression models – demand and supply, where the independent variable is the average price of long-term contracts (Power Purchase Agreement). As a result, a high degree of market sensitivity to changes in the cost of electricity was established, and the key role of cheaper technologies in accelerating the energy transformation was confirmed. The article provides a detailed econometric modelling of the solar energy market situation in the European Union countries for 2014-2024. It is proven that the price decrease was accompanied by an increase in consumption and generation. High absolute values of elasticity coefficients were obtained, which indicate a significant sensitivity of the market to the cost of electricity. A forecast was made for 2026–2027, showing that further reduction in PPA prices will lead to an increase in demand to ~215 billion kWh and supply. The work is intended for economists, financial market analysts, policymakers, and managers of energy companies who make decisions on the development of energy and investment in it. The practical value of the results obtained lies in the possibility of using the proposed approach to modelling in the activities of modern enterprises that invest in the development of alternative energy in the EU countries