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Dead Battery? Wind Power, the Spot Market, and Hydropower Interaction in the Nordic Electricity Market


  • Johannes Mauritzen


It is well established within both the economics and power system engineering literature that hydropower can act as a complement to large amounts of intermittent energy. In particular hydropower can act as a "battery" where large amounts of wind power are installed. In this paper I use simple distributed lag models with data from Denmark and Norway. I find that increased wind power in Denmark causes increased marginal exports to Norway and that this effect is larger during periods of net exports when it is difficult to displace local production. Increased wind power can also be shown to slightly reduce prices in southern Norway in the short-run. Finally, I estimate that as much as 40 percent of wind power produced in Denmark is stored in Norwegian hydropower magazines.

Suggested Citation

  • Johannes Mauritzen, 2013. "Dead Battery? Wind Power, the Spot Market, and Hydropower Interaction in the Nordic Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
  • Handle: RePEc:aen:journl:ej34-1-05

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    References listed on IDEAS

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    Cited by:

    1. François, B. & Borga, M. & Creutin, J.D. & Hingray, B. & Raynaud, D. & Sauterleute, J.F., 2016. "Complementarity between solar and hydro power: Sensitivity study to climate characteristics in Northern-Italy," Renewable Energy, Elsevier, vol. 86(C), pages 543-553.
    2. Gianfreda, Angelica & Parisio, Lucia & Pelagatti, Matteo, 2016. "Revisiting long-run relations in power markets with high RES penetration," Energy Policy, Elsevier, vol. 94(C), pages 432-445.
    3. Fogelberg, Sara & Lazarczyk, Ewa, 2017. "Wind power volatility and its impact on production failures in the Nordic electricity market," Renewable Energy, Elsevier, vol. 105(C), pages 96-105.
    4. Angelica Gianfreda & Derek Bunn, 2018. "A Stochastic Latent Moment Model for Electricity Price Formation," BEMPS - Bozen Economics & Management Paper Series BEMPS46, Faculty of Economics and Management at the Free University of Bozen.
    5. Kyritsis, Evangelos & Andersson, Jonas & Serletis, Apostolos, 2017. "Electricity prices, large-scale renewable integration, and policy implications," Energy Policy, Elsevier, vol. 101(C), pages 550-560.
    6. Mulder, Machiel & Scholtens, Bert, 2016. "A plant-level analysis of the spill-over effects of the German Energiewende," Applied Energy, Elsevier, vol. 183(C), pages 1259-1271.
    7. Fogelberg, Sara & Lazarczyk, Ewa, 2015. "The Wind Power Volatility and the Impact on Failure Rates in the Nordic Electricity Market," Working Paper Series 1065, Research Institute of Industrial Economics.
    8. Mehtap Kilic & Elisa Trujillo-Baute, 2014. "The stabilizing effect of hydro reservoir levels on intraday power prices under wind forecast errors," Working Papers 2014/30, Institut d'Economia de Barcelona (IEB).
    9. Angelica, Gianfreda & Lucia, Parisio & Matteo, Pelagatti, 2017. "The RES-induced Switching Effect Across Fossil Fuels: An Analysis of the Italian Day-Ahead and Balancing Prices and Their Connected Costs," Working Papers 360, University of Milano-Bicocca, Department of Economics, revised 03 Feb 2017.
    10. Zafirakis, Dimitrios & Chalvatzis, Konstantinos J. & Baiocchi, Giovanni & Daskalakis, Georgios, 2016. "The value of arbitrage for energy storage: Evidence from European electricity markets," Applied Energy, Elsevier, vol. 184(C), pages 971-986.
    11. Rintamäki, Tuomas & Siddiqui, Afzal S. & Salo, Ahti, 2017. "Does renewable energy generation decrease the volatility of electricity prices? An analysis of Denmark and Germany," Energy Economics, Elsevier, vol. 62(C), pages 270-282.
    12. Angelica Gianfreda, Lucia Parisio and Matteo Pelagatti, 2016. "The Impact of RES in the Italian DayAhead and Balancing Markets," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
    13. Mulder, Machiel & Scholtens, Bert, 2013. "The impact of renewable energy on electricity prices in the Netherlands," Renewable Energy, Elsevier, vol. 57(C), pages 94-100.

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    JEL classification:

    • F0 - International Economics - - General


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