The impact of wind power and electricity demand on the relevance of different short-term electricity markets: The Nordic case

Petr Spodniak, Kimmo Ollikka and Samuli Honkapuro

Applied Energy, 2021, vol. 283, issue C, No S030626192031494X

Abstract: Electricity wholesale markets are undergoing rapid transformation due to the increasing shares of variable renewable energy sources. We therefore asked whether trading activity is shifting from the traditionally dominant day-ahead market into the markets closer to real time. We studied the relevance of different electricity markets indirectly by analysing the price spreads between day-ahead, intraday and regulating power markets. We estimated vector autoregressive models for Denmark, Sweden and Finland for the period from 2015 to 2017 and studied the interrelationships between the price spreads and the effects of wind forecast and demand forecast errors, and other exogenous variables. We found that wind forecast errors do affect price spreads in areas with large shares of wind power generation. Demand forecast errors have an impact on almost all price spreads, except in areas with relatively low consumption. Interestingly, while the impact of demand forecasts was relatively stable over the studied years, the effects of wind forecasts became more important each year. As a conclusion, markets closer to real time are becoming more important due to the increasing shares of wind power, and their role as reference prices relevant for price risk hedging, capacity markets, and other decision making will probably increase in the future.

Keywords: Electricity market; Nordic; Wind forecast; Demand forecast (search for similar items in EconPapers)
JEL-codes: C32 D47 Q41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S030626192031494X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:appene:v:283:y:2021:i:c:s030626192031494x

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/bibliographic
http://www.elsevier. ... 405891/bibliographic

DOI: 10.1016/j.apenergy.2020.116063

Access Statistics for this article

Applied Energy is currently edited by J. Yan

More articles in Applied Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().