On the Impact of Wind Feed-in and Interconnections on Electricity Price in Germany

François Benhmad and Jacques Percebois
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François Benhmad: MRE - Montpellier Recherche en Economie - UM - Université de Montpellier
Jacques Percebois: UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique

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Abstract: In this paper, we explore carry out an empirical analysis for Germany, as a country with high penetration of wind energy, to investigate the interaction between the well-known merit-order effect, i.e., falling spot price levels as well as highly fluctuating spot prices and the European electricity grids inteconnections,i.e., market coupling. Our main empirical findings suggest that wind power in-feed decreases electricity spot price level but increases spot prices volatility. Furthermore, the relationship between wind power and spot electricity prices can be strongly impacted by European electricity grids interconnection which behaves like a safety valve lowering volatility and limiting the price decrease. Therefore, the impacts of wind generated electricity on electricity spot markets are less clearly pronounced in interconnected systems.

Keywords: Electricity spot prices; merit order effect; volatility (search for similar items in EconPapers)
Date: 2017-09-12
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Citations: View citations in EconPapers (1)

Published in Energy Studies Review, 2017, 23 (1), ⟨10.15173/esr.v23i1.3311⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01837122

DOI: 10.15173/esr.v23i1.3311

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