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Supply curves for hydro reservoirs – Estimation and usage in large-scale electricity market models

Christopher Jahns, Caroline Podewski and Christoph Weber

Energy Economics, 2020, vol. 87, issue C

Abstract: Hydro electricity generation is of great importance for the current and the future electricity system since it provides electricity without emitting CO2 and hydro reservoirs offer high operational flexibility. With increasing shares of fluctuating renewable energies, their value is even expected to increase, as – depending on the power plant type – they can store electricity. Therefore, an adequate representation of hydro power operation in large-scale electricity models is primordial. This paper aims to analyse empirically the operation of large-scale hydro reservoirs based on observed market data. We derive supply curves for hydro reservoirs in Norway based on electricity price and hydro production time series and analyse key influencing factors. To push further, we apply the resulting supply curves in a multi-region electricity market model and show how they may be used to perform historical and counterfactual simulations.

Keywords: Hydropower; Water value; Econometric models; Large-scale electricity market models (search for similar items in EconPapers)
JEL-codes: C51 L94 Q25 Q41 Q42 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.eneco.2020.104696

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