The impact of the North Atlantic Oscillation on electricity markets: A case study on Ireland

John Curtis, Muireann Lynch and Laura Zubiate

Energy Economics, 2016, vol. 58, issue C, 186-198

Abstract: The North Atlantic Oscillation (NAO) is a large-scale atmospheric circulation pattern driving climate variability in north-western Europe. As the deployment of wind-powered generation expands on electricity networks across Europe, the impacts of the NAO on the electricity system will be amplified. This study assesses the impact of the NAO, via wind-power generation, on the electricity market considering thermal generation costs, wholesale electricity prices and wind generation subsidies. A Monte Carlo approach is used to model NAO phases and generate hourly wind speed time-series data, electricity demand and fuel input data. A least-cost unit commitment and economic dispatch model is used to simulate an island electricity system, modelled on the all-island Irish electricity system. The impact of the NAO obviously depends on the level of wind capacity within an electricity system. Our results indicate that on average a switch from negative to positive NAO phase can reduce thermal generation costs by up to 8%, reduce wholesale electricity prices by as much as €1.5/MWh, and increase wind power generators' revenue by 12%.

Keywords: North Atlantic Oscillation; NAO; Electricity; Wind; Prices; Subsidy (search for similar items in EconPapers)
JEL-codes: Q20 Q41 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: The Impact of the North Atlantic Oscillation on Electricity Markets: A case study on Ireland (2016)
Working Paper: The Impact of the North Atlantic Oscillation on Electricity Markets: A Case Study on Ireland (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:58:y:2016:i:c:p:186-198

DOI: 10.1016/j.eneco.2016.07.003

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