The market value and impact of offshore wind on the electricity spot market: Evidence from Germany

Nikolaus Ederer

Applied Energy, 2015, vol. 154, issue C, 805-814

Abstract: Although the expansion of offshore wind has recently increased in Germany, as in other countries, it is still forced to defend its role in long-term energy policy plans, particularly against its onshore counterpart, to secure future expansion targets and financial support. The objective of this article is to investigate the economic effects of offshore wind on the electricity spot market and thus open up another perspective that has not been part of the debate about offshore vs. onshore wind thus far. A comprehensive assessment based on a large amount of market, feed-in and weather data in Germany revealed that the market value of offshore wind is generally higher than that of onshore wind. Simulating the merit order effect on the German day-ahead electricity market for the short term and long term in the years 2006–2014 aimed to identify the reason for this observation and show whether it is also an indication of a lower impact on the electricity spot market due to a steadier wind resource prevailing offshore. Although the results suggest no difference regarding the impact on market price and value, they indeed reveal that offshore wind imposes less variability on the spot market price than onshore wind. In addition, the long-term simulation proved that the ongoing price deterioration cannot be blamed on the characteristic of variable wind production.

Keywords: Offshore wind; Merit order effect; Market value; Electricity market; Price deterioration; Variability (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (26)

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DOI: 10.1016/j.apenergy.2015.05.033

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