The Impact of Wind Power Generation on the Electricity Price in Germany
No 143, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich
This paper provides insight into the relationship between intermittent wind power generation and electricity price behaviour in Germany. Using a GARCH model, the effect of wind electricity in-feed on level and volatility of the electricity price can be evaluated in an integrated approach. The results show that variable wind power reduces the price level but increases its volatility. With a low and volatile wholesale price, the profitability of electricity plants, conventional or renewable, is more uncertain. Consequently, the construction of new plants is at risk, which has major implications for the energy market and the security of supply. These challenges, related to the integration of renewables, require adjustments to the regulatory and the policy framework of the electricity market. This paper’s results suggest that regulatory change is able to stabilise the wholesale price. It is found that the electricity price volatility has decreased in Germany after the marketing mechanism of renewable electricity was modified. This gives confidence that further adjustments to regulation and policy may foster a better integration of renewables into the power system.
Keywords: Renewable energy sources; intermittency; electricity price (search for similar items in EconPapers)
JEL-codes: C22 Q42 Q48 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23) Track citations by RSS feed
Downloads: (external link)
Journal Article: The impact of wind power generation on the electricity price in Germany (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ces:ifowps:_143
Access Statistics for this paper
More papers in ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().