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Renewable Generation Capacity and Wholesale Electricity Price Variance

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  • Erik Paul Johnson and Matthew E. Oliver

Abstract

Electricity market manipulation enforcement actions have moved from conventional analysis of generator market power in real-time physical markets to materialallegations of sustained cross-product price manipulation in forward financial markets. A major challenge is to develop and apply forward market analyticalframeworks and models. This task is more difficult than for the real-time market. An adaptation of cross-product manipulation models from cash-settled financialmarkets provides an existence demonstration under uncertainty and asymmetric information. The implications of this analysis include strong empirical predictionsabout necessary randomized strategies that are not likely to be observed or sustainable in electricity markets. Absent these randomized strategies and othermarket imperfections, the means for achieving sustained forward market price manipulation remains unexplained.

Suggested Citation

  • Erik Paul Johnson and Matthew E. Oliver, 2019. "Renewable Generation Capacity and Wholesale Electricity Price Variance," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    • Handle: RePEc:aen:journl:ej40-5-oliver
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    Citations

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    Cited by:

    1. Barsha Nibedita & Mohd Irfan, 2022. "Non-linear cointegration between wholesale electricity prices and electricity generation: an analysis of asymmetric effects," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(1), pages 285-303, February.
    2. Maniatis, Georgios I. & Milonas, Nikolaos T., 2022. "The impact of wind and solar power generation on the level and volatility of wholesale electricity prices in Greece," Energy Policy, Elsevier, vol. 170(C).
    3. Yijian Ge & Lin Liu & Xilong Yao & Mohammad Aman Honardost & Ujunwa Angela Nwigwe, 2022. "Are There Conflicts among Energy Security, Energy Equity and Environmental Sustainability in China’s Provinces?," Sustainability, MDPI, vol. 14(11), pages 1-17, June.
    4. Kolb, Sebastian & Dillig, Marius & Plankenbühler, Thomas & Karl, Jürgen, 2020. "The impact of renewables on electricity prices in Germany - An update for the years 2014–2018," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
    5. Irfan, Mohd, 2021. "Integration between electricity and renewable energy certificate (REC) markets: Factors influencing the solar and non-solar REC in India," Renewable Energy, Elsevier, vol. 179(C), pages 65-74.
    6. Timothy Weber & Bin Lu, 2023. "An Open-Source Energy Arbitrage Model Involving Price Bands for Risk Hedging with Imperfect Price Signals," Energies, MDPI, vol. 17(1), pages 1-31, December.
    7. Simshauser, P. & Newbery, D., 2023. "Non-Firm vs. Priority Access: on the Long Run Average and Marginal Cost of Renewables in Australia," Cambridge Working Papers in Economics 2363, Faculty of Economics, University of Cambridge.
    8. Simshauser, Paul, 2020. "Merchant renewables and the valuation of peaking plant in energy-only markets," Energy Economics, Elsevier, vol. 91(C).
    9. Nibedita, Barsha & Irfan, Mohd, 2022. "Analyzing the asymmetric impacts of renewables on wholesale electricity price: Empirical evidence from the Indian electricity market," Renewable Energy, Elsevier, vol. 194(C), pages 538-551.
    10. Diana Bottger & Philipp Hartel, 2021. "On Wholesale Electricity Prices and Market Values in a Carbon-Neutral Energy System," Papers 2105.01127, arXiv.org.
    11. Böttger, Diana & Härtel, Philipp, 2022. "On wholesale electricity prices and market values in a carbon-neutral energy system," Energy Economics, Elsevier, vol. 106(C).
    12. Harker Steele, Amanda J. & Burnett, J. Wesley & Bergstrom, John C., 2021. "The impact of variable renewable energy resources on power system reliability," Energy Policy, Elsevier, vol. 151(C).
    13. Lee, Zachary E. & Zhang, K. Max, 2023. "Regulated peer-to-peer energy markets for harnessing decentralized demand flexibility," Applied Energy, Elsevier, vol. 336(C).

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    JEL classification:

    • F0 - International Economics - - General

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