The Influence of Temperature on Spike Probability in Day-Ahead Power Prices
AbstractIt is well known that day-ahead prices in power markets exhibit spikes. These spikes are sudden increases in the day-ahead price that occur because power production is not flexible enough to respond to demand and/or supply shocks in the short term. This paper focuses on how temperature influences the probability on a spike. The paper shows that the difference between the actual and expected temperature significantly influences the probability on a spike and that the impact of temperature on spike probability depends on the season.
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Bibliographic InfoPaper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number ERS-2007-039-F&A.
Date of creation: 08 Jun 2007
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Temperature; Day-ahead power price; Power production; Spike probability;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-07-20 (All new papers)
- NEP-BEC-2007-07-20 (Business Economics)
- NEP-ENE-2007-07-20 (Energy Economics)
- NEP-EXP-2007-07-20 (Experimental Economics)
- NEP-RMG-2007-07-20 (Risk Management)
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