 Market Integration and Wind Generation: An Empirical Analysis of the Impact of Wind Generation on Cross-Border Power PricesSébastien Annan-Phan and Fabien A. Roques
The Energy Journal, 2018, vol. Volume 39, issue Number 3 Abstract: European power markets have become more integrated and renewables have a significant effect on power prices and cross-border exchanges. This paper investigates empirically how the effects of renewables are affected by market expansion across two adjacent countries (France and Germany), based on market data and proprietary data on book orders. We find that wind production lowers power prices on average and increases volatility, not only domestically but also across borders. Using multiple counterfactuals, we examine how our results depend on the level of interconnection and find that further interconnection capacity would decrease price volatility in both countries since the benefits of a larger market would outweigh the contagion effects of volatility. Our findings have important policy implications as they demonstrate the need to coordinate support policies for renewables and policies to support transmission capacity expansion in order to mitigate the impact of volatility on power prices in neighboring power markets. JEL-codes: F0 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:aen:journl:ej39-3-roques Ordering information: This journal article can be ordered from Access Statistics for this article More articles in The Energy Journal from International Association for Energy Economics Contact information at EDIRC. |
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