Electricity Prices, Large-Scale Renewable Integration, and Policy Implications

Evangelos Kyritsis, Jonas Andersson () and Apostolos Serletis
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Jonas Andersson: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway, https://www.nhh.no/en/employees/faculty/jonas-andersson/

No 2016/18, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: This paper investigates the effects of intermittent solar and wind power generation on electricity price formation in Germany. We use daily data from 2010 to 2015, a period with profound modifications in the German electricity market, the most notable being the rapid integration of photovoltaic and wind power sources, as well as the phasing out of nuclear energy. In the context of a GARCH-in-Mean model, we show that both solar and wind power Granger cause electricity prices, that solar power generation reduces the volatility of electricity prices by scaling down the use of peak-load power plants, and that wind power generation increases the volatility of electricity prices by challenging electricity market exibility.

Keywords: Intermittency; Large-scale integration; Merit-order effect; Volatility; GARCH-in-Mean model (search for similar items in EconPapers)
JEL-codes: C22 Q41 Q42 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2016-11-22
New Economics Papers: this item is included in nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Electricity prices, large-scale renewable integration, and policy implications (2017)
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