  We develop a model for the industry dynamics in the electricity market, based
on mean-field games of optimal stopping. In our model, there are two types of
agents: the renewable producers and the conventional producers. The renewable
producers choose the optimal moment to build new renewable plants, and the
conventional producers choose the optimal moment to exit the market. The agents
interact through the market price, determined by matching the aggregate supply
of the two types of producers with an exogenous demand function. Using a
relaxed formulation of optimal stopping mean-field games, we prove the
existence of a Nash equilibrium and the uniqueness of the equilibrium price
process. An empirical example, inspired by the UK electricity market is
presented. The example shows that while renewable subsidies clearly lead to
higher renewable penetration, this may entail a cost to the consumer in terms
of higher peakload prices. In order to avoid rising prices, the renewable
subsidies must be combined with mechanisms ensuring that sufficient
conventional capacity remains in place to meet the energy demand during peak
periods.
