## 2 Background for Own Research
The authors also recommended the following:  
1. Improve the predictability of RES through more accurate prediction systems. 2. Invest in flexible resources and storage. 3. Introduce coordinated risk management policies at EU level (e.g., common capacity markets, risk insurance). In a study published in [18], the authors introduced the concept of the \"insurance value\" of renewable technologies--i.e., the ability to reduce the exposure of consumers and economies to price fluctuations. Compared to fossil resources, whose prices are linked to volatile commodities (oil, gas, coal), RES offer greater cost stability. Analysis of EU countries over the period 2008-2023 has also shown that a higher share of solar and wind power is associated with lower year-on-year volatility in household electricity prices. This effect is most pronounced in well-connected markets and where long-term investment schemes for RES are in place (e.g., CfD--Contracts for Difference). Simulation models have shown that scenarios with a high share of RES are much less likely to have extremely high prices--especially during geopolitical or commodity crises (e.g., 2021-2022 crisis). The authors also criticised the oversimplified view that RES only cause volatility. They argued that a well-designed system with the right policies (e.g., capacity markets, support for flexibility) can make RES a key instrument for price stabilization. A study published in [19; 20] highlights another paradox. The study shows that the expansion of renewable energy sources (RES) tends to lower wholesale electricity prices. However, this effect is overlaid by other factors such as  
- Decommissioning of nuclear power plants;  
- Rising coal prices;  
- Increased electrification (e.g., electromobility);  
- High gas prices. Together, these factors are pushing up electricity prices, despite the growing share of RES. Models predict that wholesale electricity prices in Germany in the coming years will be significantly higher than before the energy crisis. For example, at the beginning of 2025, prices were between 94 \(\upxi\) and 114 \(\upxi\)/MWh, more than six times that of the pre-crisis period. The study again highlights the increasing volatility of electricity prices caused by the combination of the following:  
- Unstable, rapidly changing RES generation;  
- Lack of flexible resources (e.g., batteries);  
- Inadequate infrastructure for energy transmission and storage. These factors lead to more frequent extreme price fluctuations, including negative prices during overproduction and very high prices during shortages. High and volatile electricity prices pose a challenge for households and industries, increasing costs and reducing competitiveness. This can have negative socio-economic consequences, especially for energy-intensive industries. The authors recommend:  
- Investment in flexible resources (e.g., battery storage);  
- Improving energy transmission and storage infrastructure;  
- Introducing dynamic pricing mechanisms to better reflect current supply and demand. These measures could mitigate price volatility and ensure more stable and affordable electricity prices for all consumers. The authors in [21; 22; 23] developed a simplified model of New York State's electric grid that integrates wind and solar resources to meet the state's 2030 energy goals. The model allows analysis of how electricity generation from renewable sources varies over time and space, and to what extent it matches temporal and local patterns of electricity consumption. They found that renewables can exhibit variations of up to 17% from the annual average, while combining different sources reduces this variability to about 8%. On an hourly basis, RES variability can be up to 100% above or below average, leading to a variation in annual average electricity prices and up to a 56% increase in the number of price peaks. Annual price volatility is mainly influenced by the availability of hydropower, while daily and hourly volatility are mainly influenced by the availability of solar and wind power.