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Reducing the market impact of large shares of intermittent energy in Denmark

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  • Klinge Jacobsen, Henrik
  • Zvingilaite, Erika

Abstract

The increasing prevalence of renewable and intermittent energy sources in the electricity system is creating new challenges for the interaction of the system. In Denmark, high renewable shares have been achieved without great difficulty, mainly due to the flexibility of the nearby Nordic hydro-power dominated system. Further increases in the share of renewable energy sources require that additional options are considered to facilitate integration with the lowest possible cost. With large shares of intermittent energy, the impact can be observed on wholesale prices, giving both lower prices and higher volatility. A lack of wind that causes high prices is rarely seen because long periods without wind are uncommon. Therefore we focus on the low price effects and the increased value of flexible demand options. On the supply side, there is an increase in the value of other flexible generation technologies and the attractiveness of additional interconnection capacity. This paper also analyses options for increasing the flexibility of heat generation involving large and decentralized CHP plants and heat generation based on electricity. The incentives that the market provides for shifting demand and using electricity for heat production are discussed based on the variability of prices observed from 2006 to 2008.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 38 (2010)
Issue (Month): 7 (July)
Pages: 3403-3413

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Handle: RePEc:eee:enepol:v:38:y:2010:i:7:p:3403-3413

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: Intermittent generation Electricity prices Renewables integration;

References

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  1. Munksgaard, Jesper & Morthorst, Poul Erik, 2008. "Wind power in the Danish liberalised power market--Policy measures, price impact and investor incentives," Energy Policy, Elsevier, Elsevier, vol. 36(10), pages 3940-3947, October.
  2. Klessmann, Corinna & Nabe, Christian & Burges, Karsten, 2008. "Pros and cons of exposing renewables to electricity market risks--A comparison of the market integration approaches in Germany, Spain, and the UK," Energy Policy, Elsevier, Elsevier, vol. 36(10), pages 3646-3661, October.
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Citations

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Cited by:
  1. Woo, C.K. & Horowitz, I. & Moore, J. & Pacheco, A., 2011. "The impact of wind generation on the electricity spot-market price level and variance: The Texas experience," Energy Policy, Elsevier, Elsevier, vol. 39(7), pages 3939-3944, July.
  2. Forrest, Sam & MacGill, Iain, 2013. "Assessing the impact of wind generation on wholesale prices and generator dispatch in the Australian National Electricity Market," Energy Policy, Elsevier, Elsevier, vol. 59(C), pages 120-132.
  3. Woo, C.K. & Zarnikau, J. & Moore, J. & Horowitz, I., 2011. "Wind generation and zonal-market price divergence: Evidence from Texas," Energy Policy, Elsevier, Elsevier, vol. 39(7), pages 3928-3938, July.
  4. Simoglou, Christos K. & Biskas, Pandelis N. & Vagropoulos, Stylianos I. & Bakirtzis, Anastasios G., 2014. "Electricity market models and RES integration: The Greek case," Energy Policy, Elsevier, Elsevier, vol. 67(C), pages 531-542.
  5. Schaber, Katrin & Steinke, Florian & Hamacher, Thomas, 2012. "Transmission grid extensions for the integration of variable renewable energies in Europe: Who benefits where?," Energy Policy, Elsevier, Elsevier, vol. 43(C), pages 123-135.
  6. Darghouth, Naïm R. & Barbose, Galen & Wiser, Ryan H., 2014. "Customer-economics of residential photovoltaic systems (Part 1): The impact of high renewable energy penetrations on electricity bill savings with net metering," Energy Policy, Elsevier, Elsevier, vol. 67(C), pages 290-300.
  7. Klinge Jacobsen, Henrik & Schröder, Sascha Thorsten, 2012. "Curtailment of renewable generation: Economic optimality and incentives," Energy Policy, Elsevier, Elsevier, vol. 49(C), pages 663-675.
  8. Lilian de Menezes & Melanie A. Houllier, 2013. "Modelling Germany´s Energy Transition and its Potential Effect on European Electricity Spot Markets," EcoMod2013 5395, EcoMod.
  9. Grohnheit, Poul Erik & Andersen, Frits Møller & Larsen, Helge V., 2011. "Area price and demand response in a market with 25% wind power," Energy Policy, Elsevier, Elsevier, vol. 39(12), pages 8051-8061.
  10. Chi-Keung Woo, Ira Horowitz, Brian Horii, Ren Orans, and Jay Zarnikau, 2012. "Blowing in the Wind: Vanishing Payoffs of a Tolling Agreement for Natural-gas-fired Generation of Electricity in Texas," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 1).

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