The effect of wind and solar power forecasts on day-ahead and intraday electricity prices in Germany

Marc Gürtler and Thomas Paulsen

Energy Economics, 2018, vol. 75, issue C, 150-162

Abstract: This study analyzes the effects of wind and solar power generation forecasts on electricity prices. Converse to the existing empirical literature in this area, we apply a panel data analysis to control for endogeneity due to unobserved heterogeneity. We use a dataset with 24 daily observations of day-ahead and intraday prices from 2010 to 2016, and we apply a fixed effects regression under consideration of robust Driscoll-Kraay standard errors. A noteworthy element of the regression model is the simulation-based design of a variable indicating the power generation technology that is price-determining at a certain point in time. In this context, we differentiate between the fuel types coal, gas, and others, to model the nonlinear price behavior for a varying demand. For 2016, we find price dampening effects of both wind and solar power of approximately 0.6 €/MWh per additional GWh of feed-in. Along with the rapidly increasing shares of wind and solar power of the total power generation during the last years, their price dampening effect has declined since 2013, due to a drop in fuel prices. Another finding is that a reduction in forecasting errors on the power generation from wind and solar, and smoothing of the cyclical demand would lead to a decreased price volatility.

Keywords: Merit-order effect; Renewable energy sources; Wind; Solar; Ramping costs; Forecasting errors (search for similar items in EconPapers)
JEL-codes: C33 C59 Q20 Q41 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988318302512
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:eneeco:v:75:y:2018:i:c:p:150-162

DOI: 10.1016/j.eneco.2018.07.006

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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