Do generation diversity and renewables mitigate price shocks? Empirical evidence from the 2022 European energy crisis

Generation diversity, renewable energy supply, and self-sufficiency are commonly cited hedges against supply disruptions and price risk in electricity markets, yet empirical validation of their effectiveness remains limited. The 2022 European energy crisis exposed electricity markets to severe price shocks driven by curtailed Russian gas imports. We use this natural experiment to test whether these factors mitigated the price shocks across 38 European bidding zones. Using robust linear regression models, we relate pre-crisis system characteristics (generation diversity, renewable integration, and self-sufficiency in electricity supply) to changes in average prices, extreme prices, and price variability. We find no evidence that greater generation diversity or self-sufficiency moderated price shocks during the crisis, challenging assumptions about their protective value. Larger reservoir hydro shares are the only robust predictor of smaller price increases, though we cannot fully separate the role of hydro reservoir’s flexibility and low cost from that of the partial market isolation. Variable renewable energy shares do not systematically lower either average or extreme price changes, but are associated with larger increases in day-to-day price variability. Natural gas shares show a directionally positive but imprecise association with price outcomes. The results suggest that under market coupling and marginal pricing, crisis-driven shocks transmit across bidding zones, limiting the explanatory power of zonal supply security indicators. Accordingly, assessments of price resilience should place greater emphasis on regional market dependencies rather than zonal generation structure alone.