Quantifying the economic efficiency impact of inaccurate renewable energy price forecasts

Carsten Croonenbroeck and Silke Hüttel

Energy, 2017, vol. 134, issue C, 767-774

Abstract: We demonstrate a simple approach to quantify economic efficiency losses due to inaccurate energy price forecasts. We show that empirically, forecasting errors have their impact on efficiency losses. There are hints that suggest a time-dependent pattern of deadweight losses. Solar infeed, which is considered to be a strongly volatile form of energy, increases the efficiency loss of energy allocations. For wind power, however, this effect is not significant. After all, we provide yet another argument for the requirement of even more accurate forecasts in order to decrease unwanted losses of economic efficiency, even though we show that at their current state, forecasts are fairly accurate already.

Keywords: Economic efficiency; Electricity prices; Forecasts; Deadweight loss; Electricity supply and demand (search for similar items in EconPapers)
JEL-codes: C53 C81 D61 Q41 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:134:y:2017:i:c:p:767-774

DOI: 10.1016/j.energy.2017.06.077

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