The Long-term Impact of Wind Power on Electricity Prices and Generating Capacity

Richard Green and Nicholas Vasilakos
Additional contact information
Nicholas Vasilakos: Norwich Business School, University of East Anglia

No 2011-04, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: This paper uses a market equilibrium model to calculate how the mix of generating capacity would change if large amounts of intermittent renewables are built in Great Britain, and what this means for operatingpatterns and the distribution of prices over time. If generators bid their marginal costs, we find that the changes to the capacity mix are much greater than the changes to the pattern of prices. Thermal capacity falls only slightly in response to the extra wind capacity, and there is a shift towards power stations with higher variable costs (but lower fixed costs). The changes to the pattern of prices, once capacity has adjusted, are relatively small. In an oligopolistic setting, strategic generators will choose lower levels of capacity. If wind output does not receive the market price, then mark-ups on thermal generation will be lower in a system with large amounts of wind power.

Keywords: Electricity Markets; Wind Generation; Intermittent output; Capacity mix; Capacity mix; Electricity prices; Long-term Equilibrium (search for similar items in EconPapers)
JEL-codes: L94 Q42 (search for similar items in EconPapers)
Date: 2011-01-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

Downloads: (external link)
https://ueaeco.github.io/working-papers/papers/ccp/CCP-11-04.pdf main text (application/pdf)

Related works:
Working Paper: The Long-term Impact of Wind Power on Electricity Prices and Generating Capacity (2011)
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:uea:ueaccp:2011_04

Ordering information: This working paper can be ordered from
Juliette Hardman, Center for Competition Policy, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, UK

Access Statistics for this paper

More papers in Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Juliette Hardmad ().