Now or Later? Trading wind power closer to real-time and how poorly designed subsidies lead to higher balancing costs
AbstractAn important challenge facing many deregulated electricity markets is dealing with the increasing penetration of intermittent generation. Simulation studies have pointed to the advantages of trading closer to real-time with large amounts of intermittent generation. Using Danish data, I show that, as expected, shortfalls increase the probability of trade on the shortterm market. But in the period between 2010 and 2012 surpluses are shown to decrease the probability of trade. This unexpected result is likely explained by wind power policies that discourages trading on Elbas and leads to unnecessarily high balancing costs. I use a rollingwindow regression to support this claim.
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Bibliographic InfoPaper provided by Department of Business and Management Science, Norwegian School of Economics in its series Discussion Papers with number 2013/1.
Length: 22 pages
Date of creation: 25 Apr 2013
Date of revision:
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Deregulated electricity markets; intermittent generation; wind power;
Other versions of this item:
- Mauritzen, Johannes, 2013. "Now or Later? Trading Wind Power Closer to Real-time and How Poorly Designed Subsidies Lead to Higher Balancing Costs," Working Paper Series 969, Research Institute of Industrial Economics.
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-20 (All new papers)
- NEP-ENE-2013-07-20 (Energy Economics)
- NEP-REG-2013-07-20 (Regulation)
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