The Merit-Order Effect of Energy Efficiency

1876-6102 © 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review by the scientific conference committee of EEIC | CIEE 2016 under responsibility of Guest Editors. doi: 10.1016/j.egypro.2016.12.114 1st Energy Economics Iberian Conference, EEIC | CIEE 2016, February 4-5, Lisbon, Portugal, APEEN (www.apeen.org) and AEEE (www.aeee.es) The Merit-Order Effect of Energy Efficiency Juan-Manuel Roldan-Fernandeza a*, Manuel Burgos-Payana, Jesus-Manuel Riquelme-Santosa and Angel-Luis Trigo-Garciaa aUniversity of Sevilla, Camino de los Descubrimientos, s/n. Sevilla 41092, Spain Abstract The integration of certain amount of renewable generation in the wholesale market right-shifted the merit-order generation curve, which produces a noticeable reduction of the clearing price while slightly increases the traded energy (almost inelastic demand curve). The downward pressure on the clearing price is mainly due to the fact that the introduction of renewable generation bids with very low (even null) marginal cost, displaces to the right all kinds of conventional technologies (with higher marginal cost), including the technology which would otherwise have set the clearing market price. This right-shifted displacement of the merit-order generation curve leads to a lower wholesale clearing price, a small increment of the traded energy and a reduction of the total cost of the traded energy in the wholesale market. This is the key mechanism and its main effects on the market of the very well-known meritorder effect of the renewables. The promotion of energy-efficiency plans (industry and domestic) by policy-makers is expected to yield a reduction of the demand. As a result of the reduction of demand bids, the merit-order demand curve would experience a left-sifted displacement, which would produce a reduction of both the clearing price and the amount of traded energy. Consequently, the total cost of the traded energy also would diminish. As can be seen, the parallelism of the main effects on the market between the integration of renewable and energy efficiency evidences the existence of what can be called the merit-order effect of energy efficiency. To analyze the characteristics of this merit-order effect of the energy efficiency, a simplified model, based on the linearization of the market around the clearing point, is developed. This simplified model is also used to compare the merit-order effect of energy efficiency and renewables. A set of scenarios with energy efficiency and renewables have been generated in order to quantify the main effects on the Spanish/Iberian market for the year 2014. © 2016 Published by Elsevier Ltd. Selection and/or peer-review under responsibility of [name organizer] Electricity markets; Renewable energy; Energy efficiency; Merit-order effect. * Corresponding author. Tel.: +34 954487283; fax: +34 954487284. E-mail address: jmrolda[email protected]s. © 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review by the scientific conference committee of EEIC | CIEE 2016 under responsibility of Guest Editors. 176 Juan-Manuel Roldan-Fernandez et al. / Energy Procedia 106 ( 2016 ) 175 – 184 1. Introduction Once the supply and demand bids have been elaborated and submitted by the corresponding generation and demand agents, the Market Operator elaborates, for every hour of the day-ahead, a merit order dispatch by ordering the supply bids in ascending price order and demand bids in descending order. After that, and simplifying the complex optimization process that takes place, the Market Operator carries out the matching clearing point by the intersection of the merit order supply curve with the demand curve. Since renewable generators extract the energy from a natural source (wind or sun, e.g.), they can produce electric power with very low operating costs. This allows renewable generators to submit their bids offering energy at very low (even null) marginal cost. The methodology of elaboration of the merit order generation dispatch made that when a renewable generator offer a bid with certain amount of energy at very low cost, the Market Operator inserts the renewable bid by right-shifting the merit order generation/sale curve. This right-shifting produces a noticeable reduction of the clearing price while only slightly increases the traded energy, due to the characteristic lack of elasticity of the demand/buy curves. As can be seen the downward pressure of the renewable generators on the clearing price is mainly due to the fact that the introduction of renewable generation bids with very low (even null) marginal cost, displaces to the right all kinds of conventional technologies (with higher marginal cost), including the technology which would otherwise have set the market clearing price. The integration of renewable induces a displacement of the operating point of the wholesale market towards a lower clearing price, a small increment of the traded energy and, as a consequence, a reduction of the total cost of the traded energy in the wholesale market. This is the key mechanism, and its main effects, on the market of the very well-known merit-order effect of renewables. The avoided amount of burned fossil fuel and the consequent reduction of CO2 emissions due to the shifted fossil fuel generation leads to a secondary mechanism for reducing the clearing price of energy, as the reduction of the demand of fossil fuel and CO2 emission allowances reduces the demand of both the fuel (in the international market) as well as of the CO2 emission allowances, putting a downward pressure on its prices and thus reducing the costs of the remainder cleared fossil fuel-based generators. The interest of consumers (industry and domestic) to reduce their energy bills and the promotion of energy-efficiency plans by policy-makers is expected to yield a reduction of the demand. As a result of the reduction of demand bids, the merit order demand/buy curve would experience a left-shifted displacement, which would produce a reduction of both the clearing price and the amount of traded energy. Consequently, the total cost of the traded energy would also diminish. Again, the avoided burning of fossil fuel and CO2 emissions due to the fossil fuel not required lead to a secondary via for reducing the clearing price of energy, as this reduces the costs of the remainder cleared fossil fuel-based generators. As can be seen, the parallelism of the effects on the market between the integration of renewable and energy efficiency demonstrates the existence of what could be called the merit-order effect of energy efficiency. This work seeks to analyze the characteristics of this merit-order effect of the energy efficiency and carry out a comparison with the corresponding characteristics of the merit-order effect of renewables. To achieve that purpose, a simplified model, based on the linearization of the market around the clearing point, will be used to explore some basic conjectures. Then an appropriate set of empirical-based scenarios with energy-efficiency as well as integration of renewables have been generated from the retrieved historic information of the Market Operator (OMIE) for the year 2014, in order to quantify the main effects on the Spanish/Iberian market. After the introduction, the content of the paper is as follows. First the Spanish/Iberian electricity market is shortly surveyed and a simplified model, based on the linearization of the market around the clearing point, is used to check some hypothesis regarding the expected effects of energy-efficiency and renewables. Next, the hourly merit-order generation and Juan-Manuel Roldan-Fernandez et al. / Energy Procedia 106 ( 2016 ) 175 – 184 177 demand curves for 2014 are used as source data for the design of feasible energy-efficiency and renewable scenarios. After that, the main potential effects on the wholesale market are quantified and analyzed. The paper ends with the main findings of the comparison. 2. The Spanish/Iberian wholesale market The joint European regional market for Spain (OMEL - Market Operator of the Spanish pole) and Portugal (OMIP - Market Operator of the Portuguese pole) is organized by OMIE (Operador del Mercado Ibérico de la Energía), the Market Operator of the Iberian Electricity Market. OMIE is integrated in the European Multi-Regional Coupling (MRC) since 2014, and its market clearing regulation is under the rules of EUPHEMIA (EU + Pan-European Hybrid Electricity Market Integration Algorithm) [1]. The daily market is composed of 24 hourly markets that are cleared once a day by the Market Operator. The purpose of the daily market is the scheduling of electricity transactions for the day ahead which is performed through the submittal of electricity sale (generation) and purchase (demand) bids by their respective market agents. Two kinds of bids are considered in the Spanish/Iberian Electricity Market: simple and complex bids. Simple bids are just simple price and energy bids. Complex bids, only allowed for generation units, are bids which include any of the following conditions: indivisibility of blocks of energy, minimum income, scheduled stops and load gradient. Once the supply and demand bids have been submitted by the agents, the Market Operator (OMIE) elaborates, for every hour of the day-ahead, a merit order dispatch by ordering (by merit) the supply bids in ascending price order and demand bids in descending order. Firstly only the simple bids are considered to elaborate the merit order (aggregated) supply and demand curves. After that, the Market Operator carries out the simple matching clearing point by the intersection of the merit order supply curve with the demand curve. After that an iterative optimization algorithm finds a new solution, including the restrictions of the generation complex bids. After finishing the optimization procedure by means of EUPHEMIA, the final clearing price and traded energy are set for each hour of the day ahead. Finally, the System Operator (REE – Red Eléctrica de España) validates units schedule considering the technical constraints of the electrical system. As often happens in optimization problems, as the number of restrictions increases the optimal solution impairs. In the case of the electricity market, complex offer generation bids (significantly) increase the final clearing price and (slightly) reduces the traded energy. Conditionally on being dispatched, the price to be received or paid by the market participants is set according to a uniform-price auction. Irrespectively of their bids, the price producers receive or demand units pay is set equal to the highest accepted supply bid, the so-called system marginal price. 3. A simplified analysis of the price formation in the wholesale market Fig. 1 shows both the merit order generation, pG = pG(W), and demand, pD = pD(W), curves as well as the traded energy (Wi = 34183.4 MWh) and the matching clearing price (pi = 71.00 €/MWh) for a peak hour (20:00 h) in a winter working day (Tuesday, February 10, 2015) corresponding to OMIE [2]. By its own nature, the supply curve, pG = pG(W), has a (gentle) positive slope, while the demand curve, pD = pD(W), has a very negative slope, as usually. If the supply and demand curves were continuous (not stepped) and mG = dpG(W)/dW > 0 and mD = dpD(W)/dW << 0 were, respectively, the slopes of the supply (mG = 1.4 €/GWh2) and demand curves (mD = –13.5 €/GWh2) at the initial clearing point (A in Fig. 1), both the supply and demand curves could be linearly approximated, in the surrounding of the initial clearing point (Wi,pi), as: 178 Juan-Manuel Roldan-Fernandez et al. / Energy Procedia 106 ( 2016 ) 175 – 184 0 20 40 60 80 100 010 20 30 40 50 p G (W) ≈p Gi + m G W Generation merit-order simple bids Demand merit-order simple bids Generation cleared Energy (GWh) Price (€/MWh) Demand cleared W i p i A(W i ,p i ) p D (W) ≈p Di + m D W p G (W) p D (W) Fig. 1. Merit order generation, pG = pG(W), and demand, pD = pD(W), curves as well as the traded energy, Wi = 34.18 GWh, and the matching clearing price, pi = 71.00 €/MWh, for a peak hour (20:00 h) in a winter working day (Tuesday, February 10, 2015) corresponding to OMIE [2]. Linearization of the market around the initial matching point. () ( ) GiGiiGiGGiG pW p mWW p mW mW p mW   () ( ) DiDiiDiDDiD pW p mWW p mW mW p mW   Where the respective ordinates at the origin of the linear approximations are: Gi i G i ppmW  and Di i D i ppmW  The total income for the producers (generators) or the total cost for consumers derived from the energy traded at the wholesale market, when only the market rules are considered, can be expressed as C(Wi)= Wi · p i. With this linearized market model around the clearing point, both the merit-order effect of renewable and energy efficiency are surveyed and compared in order to get a qualitative advance of the potential effects of these measurements on the performance of the market stakeholders. Table 1. Data for the linearization of the market around the initial clearing point corresponding to the merit order generation and demand curves for a winter working day (Tuesday, February 10, 2015; 20:00 h) corresponding to OMIE [2]. Magnitud (unit) Value Energy traded (GWh) Wi = 34.18 Clearing price (€/MWh) pi = 71.00 Generation slope (€/GWh2) mG = 1.4 Demand slope (€/GWh2) mD = -13.5 Given that the wholesale market is a marginal market, the clearing point is the only thing that matters. This means that although the linear approximations of the merit order curves (pG Ĭ pGi + mGW and pD Ĭ pDi + mDW) are quite different of the actual generation and demand curves (pG = pG(W) and pD = pD(W)), both sets of curves can lead to the same or very close clearing point. Juan-Manuel Roldan-Fernandez et al. / Energy Procedia 106 ( 2016 ) 175 – 184 179 Table 1 summarized the data corresponding to a peak hour (20:00 h) of a winter working day (Tuesday, February 10, 2015) in the wholesale Iberian market (OMIE) used in the following illustrative examples [2]. 3.1. Renewables Currently, the Spanish/Iberian market regulation requires that the Market Operator includes, preferably, all bids received from renewable generators, as long as it does not cause any risk or technical difficulty for the safe operation of the system. As a consequence, the integration of new renewable generation bids (∆ER > 0) at very low (or even null) marginal price results mainly in a right-side shifting of the initial merit order generation curve. The linear approximation of this new offer curve, pGR = pGR(W), is shown in Fig. 2 as a straight line parallel to the linear approximation of the primitive generation curve: ()() () GR G R Gi G R Gi G R G GRi G pW pW E p mW E p mE mWp mW ' ' '  Where the ordinate at the origin of the new linear approximation is: () GRi Gi G R i G i R ppmEpmWE '  ' With this linearized market model, the new clearing price and traded energy (B in Fig. 2) can be obtained equalling the new generation curve with the demand curve, as: () () GR GRi G D Di D pW p mWpW p mW  Fig. 2. Merit order generation, pG = pG(W), and demand, pD = pD(W), curves and matching clearing price (pi = 71.00 €/MWh) and traded energy (Wi = 34.18 GWh) for a peak hour (20:00 h) in a winter working day (Tuesday, February 10, 2015) corresponding to the wholesale Iberian market [2]. Changes in the market clearing operating point due to the integration of renewable and energy efficiency bids. 0 20 40 60 80 100 010 20 30 40 50 p DL (W) = p D (W - ΔE L ) p G (W) p GR (W) = p G (W + ΔE R ) p D (W) W(ΔE L )W(ΔE R ) Generation merit-order simple bids Demand merit-order simple bids Generation cleared Energy (GWh) Price (€/MWh) Demand cleared ΔE L = ΔE R ΔW(ΔE L ) ΔW(ΔE R ) W i A(W i ,p i ) Δp(ΔE L )= Δp(ΔE R ) p DL (ΔE L )= p GR (ΔE R ) p i C(p Lf ,W Lf )B(p Rf ,W Rf ) ΔE L ΔE R 180 Juan-Manuel Roldan-Fernandez et al. / Energy Procedia 106 ( 2016 ) 175 – 184 Table 2. Linearized market model estimation of the variation of the traded energy, price and cost derived from the integration of certain amount of renewable energy, ∆ER, and from the curtailment of certain amount of demand due to energy efficiency improvement, ∆EL. (Data corresponding to a peak hour (20:00 h) in a winter working day (Tuesday, February 10, 2015) of the wholesale Iberian market [2]). Renewables Relative variation of the traded energy () 0 G R RGD m WE Emm '' ! ' 0.09 Relative variation of the clearing price (€/MWh2) () 0 GD RR RGD mm pE Emm ''  ' -1.27·10-3 Relative variation of the cost of the energy traded (€/MWh) () () 0 iD i G R RGD Wm p m CE Emm  '' ' -36.7 Energy efficiency Relative variation of the traded energy () 0 LD LGD WE m Emm ''  ' -0.91 Relative variation of the clearing price (€/MWh2) () 0 GD LL LGD mm pE Emm ''  ' -1.27·10-3 Relative variation of the cost of the energy traded (€/MWh) () () 0 iG i D L LGD Wm p m CE Emm  '' ' -107.7 Comparison Relative variation of the traded energy () 0 () G R LD m WE E WE E m '' '  '' ' -0.1 Relative variation of the clearing price () 1 () GD G D RR LL GDGD mm m m pE E pE E mmmm  '' ' '' '  1.00 Relative variation of the cost of the traded energy () () <1 ()() iD i G R LiGiD Wm p m CE E CE E Wm pm  '' ' '' '  0.34 Relative variation of the sum of the traded energy ()() 1 GD RL GD mm WE E WE E Emm  '' ''' ' ' 1.00 Now the traded energy, W = W(ΔER), can be expressed as: () () () Di GRi i D i i G i R G RiRiR GD GD GD pp pmWpmWE m WE W E W WE mm mm mm ' ' ' ''   As a result, the increment of the traded energy can be approximated as: () 0 G RR GD m WE E mm '' '!  The clearing price, pGR (W) = pD(W), results: Juan-Manuel Roldan-Fernandez et al. / Energy Procedia 106 ( 2016 ) 175 – 184 181 ( ( )) ( ( )) ( ) GD GR i R GRi G i R i R i R R GD mm pWW WE p mW WE p E p p E mm ''  ''  ' ''  where the price variation (reduction) is: () 0 GD RR R GD mm pE E mm '' '  It should be observed that since the slope of the supply is smaller than the absolute value of the corresponding to the demand curve (0 < mG << |mD|), the increment of traded energy result very much lesser than the increment of renewable energy bids integrated in the market: () 01 G R RGD m WE Emm '' ' This means that the clearing of certain amount of renewable energy bids, ΔER, by the Market Operator leaves out almost the same amount of energy bids from other more expensive and probably polluting production technologies, ΔW(ΔER) << ΔER, and leads to a reduction of the hourly clearing price proportional to the amount of renewable energy integrated. This is the base of the so-called merit-order effect of the renewable energy [3-6]. Therefore, the integration of certain quantity of renewable energy bids, ΔER, by the Market Operator yields a reduction of the cost of the traded energy (ΔC(ΔER) << 0) which is proportional to the amount of renewable energy integrated. As an example, Table 2 summarized the results corresponding to the variation of the traded energy, clearing price and economic volume of the traded energy derived from the integration of certain amount of renewable energy, ∆ER, for the illustrative example (Table 1). 3.2. Energy Efficiency Consumers that apply for energy efficiency programs expect to save in the electricity energy bill, mainly due to the projected energy saving [7-10]. The curtailment of certain amount of demand bids (∆EL > 0) at high marginal price, where the energy efficiency actions would be more cost-efficient, produces a left-shifting of the initial merit order demand curve. The linear approximation of this new demand curve, pDL = pDL(W), is shown in Fig. 2 as a straight line parallel to the primitive linear approximation of the demand curve: ()() () DL D L Di D L Di D L D DLi D pW pW E p mW E p mE mWp mW ' ' '  Where () DLi Di D L i D i L ppmEpmWE '  ' Now, the new clearing price and traded energy (C in Fig. 2) can be obtained equaling the new (reduced) demand curve with the primitive generation curve. As an example, central part of Table 2 summarized the results corresponding to the illustrative example (Table 1). Since the slope of the supply is much smaller than the corresponding to the demand curve, in absolute value (0 < mG << |mD|), the reduction of traded energy result almost equal (but something smaller) than the avoided demand bids: () 01 LD LGD WE m Emm '' !! ' Hence, the saving of some quantity of demand bids resulting from certain energy efficiency improvement of the consumers, ΔEL, makes the Market Operator leaving out almost the same amount of generation bids from more expensive production technologies, WL(ΔEL) # ΔEL, and yields a reduction of 182 Juan-Manuel Roldan-Fernandez et al. / Energy Procedia 106 ( 2016 ) 175 – 184 the clearing price and of the cost of the traded energy which are proportional to the amount of saved energy bids. This is the base of the merit-order effect of the energy efficiency which is very similar to the corresponding to renewables. Finally, the variation (reduction) of the cost of the energy traded in the market can also be approximate as: () () 0 iD i G RR GD Wm p m CE E mm  '' '  Therefore, the curtailment of some amount of demand bids resulting from energy efficiency improvement of the consumers, ΔEL, yields a reduction of the total cost of the traded energy (ΔC(ΔEL) << 0) which is proportional to the amount of saved energy bids. Finally, comparing the intensity of the merit-order effect of energy efficiency and renewables (ΔER = ΔEL = ΔE, bottom part of Table 2), the following conclusions can be stated: Finally, a comparison of the intensity of the merit-order effect of energy efficiency and the corresponding to renewables (ΔER = ΔEL = ΔE, bottom part of Table 2), allows the following conclusions: x The reduction of the market clearing price is the same for both the energy efficiency and the renewable scenarios. x The energy efficiency scenario leads to a reduction of the traded energy which is almost equal to the saved energy while the renewable case leads to a slight increment of the traded energy. This means that the energy efficiency is a more effective tool at removing the more expensive and probably polluting generation technologies. x The reduction of the total cost of the traded energy in the energy efficiency scenario is greater than the corresponding to the renewable case, since the reduction in the efficiency scenario benefits from the reduction of the clearing price but also from the reduction of the traded energy. 4. Results Tables 3 and 4 summarized the results of the energy efficiency (small consumers) and renewable cases for Spain along 2014. More precisely, Table 4 summarizes the mean values of the variations of the annual traded energy, hourly clearing price and annual cost of the traded energy, while Table 5 shows the mean values of the rate of variation with the energy saving and renewable bids of the annual traded energy, hourly clearing price and annual cost of the traded energy. Table 3. Mean values of the variations of the yearly traded energy, hourly clearing price and yearly cost of the traded energy Spain 2014 Yearly mean W = 221 TWh/y p = 42.13 €/MWh C = 9346 M€/y ΔE = 0.5% Load (0.90 TWh/y) ΔE = 1% Load (1.81 TWh/y) ΔE = 2% Load (3.62 TWh/y) Small consumers Units Efficiency ΔEL* Renewable ΔER* Efficiency ΔEL* Renewable ΔER* Efficiency ΔEL* Renewable ΔER* ΔW(ΔE) GWh -607.59 250.18 -1207.66 507.88 -2417.48 1013.61 Δp(ΔE) €/MWh -0.39 -0.39 -0.69 -0.69 -1.26 -1.26 ΔC(ΔE) M€ -121.62 -82.97 -206.32 -129.02 -387.58 -232.99 *ΔER = ΔEL = ΔE Juan-Manuel Roldan-Fernandez et al. / Energy Procedia 106 ( 2016 ) 175 – 184 183 Table 4. Mean values of the rate of variation with the load saving or renewable bids of the annual traded energy, hourly clearing price and yearly cost of the traded energy Spain 2014 Yearly mean W = 221 TWh/y p = 42.13 €/MWh C = 9346 M€/y ΔE = 0.5% Load (0.90 TWh/y) ΔE = 1% Load (1.81 TWh/y) ΔE = 2% Load (3.62 TWh/y) Small consumers Units Efficiency ΔEL* Renewable ΔER* Efficiency ΔEL* Renewable ΔER* Efficiency ΔEL* Renewable ΔER* ΔW(ΔE)/ΔE - -0.68 0.27 -0.68 0.26 -0.68 0.26 Δp(ΔE)/ΔE €/MWh2 -3.46·10-3 -3.46·10-3 -3.30·10-3 -3.30·10-3 -3.21·10-3 -3.21·10-3 ΔC(ΔE)/ΔE €/MWh -135.14 -92.19 -113.99 -71.28 -107.07 -64.36 *ΔER = ΔEL = ΔE As anticipated by the linear model approximation, the results lead to the following main conclusions: x For the energy efficiency scenarios, the mean values of the yearly traded energy, the hourly clearing price and the annual cost of the traded energy are always smaller than the corresponding to the base case, and their reductions grow almost linearly with the amount of load-saving bids. x For the corresponding renewable cases the traded energy is always slightly greater that the corresponding to de base case and its increment grows with the amount of renewable bids. On the contrary, the clearing price and the cost of the traded energy are smaller than for the base case, and their reductions grow with the quantity of renewable bids. When the same amount of load-saving and renewable bids is considered (ΔER = ΔEL = ΔE): x The clearing price (and its variation) for energy efficiency is almost the same than for renewables, Δp(ΔER = ΔE) | Δp(ΔEL = ΔE). x The intensity of the variation of the traded energy (absolute value), ΔW(ΔE)/ΔE, and cost of the traded energy, ΔC(ΔE)/ΔE, is always stronger for energy efficiency than for renewables. More precisely, the intensities are (ΔW(ΔER)/ΔER)/(°ΔW(ΔEL)°/ΔEL) ≈ 2.4 and (ΔC(ΔER)/ΔER)/(ΔC(ΔEL)/ΔEL) ≈ 1.6, respectively. x The addition of the reduction of the traded energy for the efficiency scenario and the increment of the traded energy for the corresponding renewable scenario is almost equal to the amount of saving load bids or the renewable energy bids, ΔW(ΔER) - ΔW(ΔEL) | ΔE. 5. Conclusions The high and growing cost of the energy, the interest of both domestic and industrial consumers on reducing their energy bills or the promotion of energy-efficiency plans by policy-makers are expected to work as drivers for a reduction of the demand. Such a reduction of demand bids will produce a left-shifted displacement of the merit order demand/buy curve, which will produce a reduction of the clearing price, the amount of traded energy and, as a consequence, a reduction of the total cost of the traded energy. The downward pressure of load saving and energy efficiency tools on the clearing price is mainly due to the fact that the displacement to the left of the merit order demand/buy curve produced by the reduction of demand bids, displaces the operating point of the wholesale market in such a way that the resulting clearing technology has a lower marginal costs than the technology which otherwise would have set the market clearing price. This is the key mechanism, and its main effects, on the market of merit-order effect of the energy efficiency which is very similar to the very well-known merit-order effect of renewables.