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Estimating the impact of wind generation and wind forecast errors on energy prices and costs in Ireland

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  • Swinand, Gregory P.
  • O'Mahoney, Amy

Abstract

This paper studies the impact of wind generation on system costs and prices in Ireland. The importance of wind power and potential impacts on system costs is of interest to power system planners and policy makers globally. However, the impact of wind generation on system costs has been only studied with limited actual data from power systems with increased wind penetration. The paper uses a unique dataset of half-hourly system demand, generation, forecast and actual wind generation, along with Irish system marginal price (SMP) data from 2008 to autumn 2012. An econometric time-series model of SMP as a function of forecast and realized demand and wind generation yields results which suggest that each 1% increase in wind generation reduces SMP in Ireland by about 0.06%, while each 1% wind forecast error increases SMP about 0.02%. In absolute terms, though, at the mean the impact of wind forecast errors is small, or about 0.4€cent/MWh-wind generated.

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  • Swinand, Gregory P. & O'Mahoney, Amy, 2015. "Estimating the impact of wind generation and wind forecast errors on energy prices and costs in Ireland," Renewable Energy, Elsevier, vol. 75(C), pages 468-473.
    • Handle: RePEc:eee:renene:v:75:y:2015:i:c:p:468-473
    DOI: 10.1016/j.renene.2014.09.060
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    2. Curtis, John & Lynch, Muireann Á. & Zubiate, Laura, 2016. "The impact of the North Atlantic Oscillation on electricity markets: A case study on Ireland," Energy Economics, Elsevier, vol. 58(C), pages 186-198.
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    6. González-Aparicio, I. & Zucker, A., 2015. "Impact of wind power uncertainty forecasting on the market integration of wind energy in Spain," Applied Energy, Elsevier, vol. 159(C), pages 334-349.
    7. Lisa MH Hall & Alastair Buckley & Jose Mawyin, 2015. "Estimating the Impact of Wind Generation in the UK," Papers 1510.05854, arXiv.org, revised Nov 2015.
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    10. Slednev, Viktor & Bertsch, Valentin & Ruppert, Manuel & Fichtner, Wolf, 2017. "Highly resolved optimal renewable allocation planning in power systems under consideration of dynamic grid topology," MPRA Paper 79706, University Library of Munich, Germany.
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    More about this item

    Keywords

    Cost function; Econometrics; Power generation economics; Power system economics; Wind power generation;
    All these keywords.

    JEL classification:

    • D0 - Microeconomics - - General
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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