IDEAS home Printed from https://ideas.repec.org/a/aen/journl/ej41-2-wen.html
   My bibliography  Save this article

Spatial Effects of Wind Generation and Its Implication for Wind Farm Investment Decisions in New Zealand

Author

Listed:
  • Le Wen, Basil Sharp, and Erwann Sbai

Abstract

Spill-over effects on electricity nodal prices associated with increased wind generation have not been examined in the literature. To examine these effects, we use spatial econometric models to estimate the direct and indirect effects of wind generation on nodal wholesale electricity prices. Spatial econometric models allow us to provide quantitative estimates of spill-over magnitudes and statistical tests for significance. Results show negative and significant effects are associated with increases in wind penetration, and the effect is stronger during peak hours and weaker during off-peak hours. Simulation results demonstrate net savings of NZ$8 million per MW of additional wind capacity installed at the CNI2 wind site. The findings provide valuable information on the evaluation of wind farm development in terms of site location, wholesale prices, and financial feasibility. Our approach also contributes to forecasting location specific wholesale electricity prices, and provides a better understanding of the implications of locating wind sites.

Suggested Citation

  • Le Wen, Basil Sharp, and Erwann Sbai, 2020. "Spatial Effects of Wind Generation and Its Implication for Wind Farm Investment Decisions in New Zealand," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 47-72.
  • Handle: RePEc:aen:journl:ej41-2-wen
    as

    Download full text from publisher

    File URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=3477
    Download Restriction: Access to full text is restricted to IAEE members and subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Oliver Browne & Stephen Poletti & David Young, 2012. "Simulating market power in the New Zealand electricity market," New Zealand Economic Papers, Taylor & Francis Journals, vol. 46(1), pages 35-50, December.
    2. Alessandra Faggian & Philip McCann, 2009. "Human capital, graduate migration and innovation in British regions," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 33(2), pages 317-333, March.
    3. Harris, Richard D. F. & Tzavalis, Elias, 1999. "Inference for unit roots in dynamic panels where the time dimension is fixed," Journal of Econometrics, Elsevier, vol. 91(2), pages 201-226, August.
    4. Sébastien Annan-Phan and Fabien A. Roques, 2018. "Market Integration and Wind Generation: An Empirical Analysis of the Impact of Wind Generation on Cross-Border Power Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    5. Suomalainen, Kiti & Pritchard, Geoffrey & Sharp, Basil & Yuan, Ziqi & Zakeri, Golbon, 2015. "Correlation analysis on wind and hydro resources with electricity demand and prices in New Zealand," Applied Energy, Elsevier, vol. 137(C), pages 445-462.
    6. Mason, I.G. & Page, S.C. & Williamson, A.G., 2010. "A 100% renewable electricity generation system for New Zealand utilising hydro, wind, geothermal and biomass resources," Energy Policy, Elsevier, vol. 38(8), pages 3973-3984, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wen, Le & Guang, Fengtao & Sharp, Basil, 2021. "Dynamics in Aotearoa New Zealand’s energy consumption between 2006/2007 and 2012/2013," Energy, Elsevier, vol. 225(C).
    2. Yi, Ming & Liu, Yafen & Sheng, Mingyue Selena & Wen, Le, 2022. "Effects of digital economy on carbon emission reduction: New evidence from China," Energy Policy, Elsevier, vol. 171(C).
    3. Guang, Fengtao & Wen, Le & Sharp, Basil, 2022. "Energy efficiency improvements and industry transition: An analysis of China's electricity consumption," Energy, Elsevier, vol. 244(PA).
    4. Ajanaku, Bolarinwa A. & Collins, Alan R., 2024. "“Comparing merit order effects of wind penetration across wholesale electricity markets”," Renewable Energy, Elsevier, vol. 226(C).
    5. Mohapatra, Souryabrata & Wen, Le & Sharp, Basil & Sahoo, Dukhabandhu, 2024. "Unveiling the spatial dynamics of climate impact on rice yield in India," Economic Analysis and Policy, Elsevier, vol. 83(C), pages 922-945.
    6. Wen, Le & Suomalainen, Kiti & Sharp, Basil & Yi, Ming & Sheng, Mingyue Selena, 2022. "Impact of wind-hydro dynamics on electricity price: A seasonal spatial econometric analysis," Energy, Elsevier, vol. 238(PC).
    7. Lai, Chunyang & Kazemtabrizi, Behzad, 2024. "A novel data-driven tighten-constraint method for wind-hydro hybrid power system to improve day-ahead plan performance in real-time operation," Applied Energy, Elsevier, vol. 371(C).
    8. Wen, Le & Sheng, Mingyue Selena & Sharp, Basil & Meng, Tongyu & Du, Bo & Yi, Ming & Suomalainen, Kiti & Gkritza, Konstantina, 2023. "Exploration of the nexus between solar potential and electric vehicle uptake: A case study of Auckland, New Zealand," Energy Policy, Elsevier, vol. 173(C).
    9. De Siano, Rita & Sapio, Alessandro, 2022. "Spatial merit order effects of renewables in the Italian power exchange," Energy Economics, Elsevier, vol. 108(C).
    10. Suomalainen, Kiti & Wen, Le & Sheng, Mingyue Selena & Sharp, Basil, 2022. "Climate change impact on the cost of decarbonisation in a hydro-based power system," Energy, Elsevier, vol. 246(C).
    11. Yang Yi & Le Wen & Shan He, 2022. "Partitioning for “Common but Differentiated” Precise Air Pollution Governance: A Combined Machine Learning and Spatial Econometric Approach," Energies, MDPI, vol. 15(9), pages 1-23, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wen, Le & Suomalainen, Kiti & Sharp, Basil & Yi, Ming & Sheng, Mingyue Selena, 2022. "Impact of wind-hydro dynamics on electricity price: A seasonal spatial econometric analysis," Energy, Elsevier, vol. 238(PC).
    2. Gholami, Mina Bahrami & Poletti, Stephen & Staffell, Iain, 2021. "Wind, rain, fire and sun: Towards zero carbon electricity for New Zealand," Energy Policy, Elsevier, vol. 150(C).
    3. Engeland, Kolbjørn & Borga, Marco & Creutin, Jean-Dominique & François, Baptiste & Ramos, Maria-Helena & Vidal, Jean-Philippe, 2017. "Space-time variability of climate variables and intermittent renewable electricity production – A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 600-617.
    4. Bruinshoofd Allard & Kool Clemens, 2002. "The Determinants of Corporate Liquidity in the Netherlands," Research Memorandum 014, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    5. Kolawole Ogundari & Shoichi Ito & Victor O Okoruwa, 2016. "Estimating nutrition-income elasticities in sub-Saharan Africa: implications on health," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 43(1), pages 59-69, January.
    6. Lei Gao & Taowu Pei & Jingran Zhang & Yu Tian, 2022. "The “Pollution Halo” Effect of FDI: Evidence from the Chinese Sichuan–Chongqing Urban Agglomeration," IJERPH, MDPI, vol. 19(19), pages 1-17, September.
    7. Apergis, Nicholas & Payne, James E., 2010. "Coal consumption and economic growth: Evidence from a panel of OECD countries," Energy Policy, Elsevier, vol. 38(3), pages 1353-1359, March.
    8. Olukunle O. Owolabi & Kathryn Lawson & Sanhita Sengupta & Yingsi Huang & Lan Wang & Chaopeng Shen & Mila Getmansky Sherman & Deborah A. Sunter, 2022. "A Robust Statistical Analysis of the Role of Hydropower on the System Electricity Price and Price Volatility," Papers 2203.02089, arXiv.org.
    9. Guglielmo Maria Caporale & Anamaria Diana Sova & Robert Sova, 2024. "The Covid‐19 pandemic and European trade flows: Evidence from a dynamic panel model," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 2563-2580, July.
    10. George Halkos & Iacovos Psarianos, 2016. "Exploring the effect of including the environment in the neoclassical growth model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(3), pages 339-358, July.
    11. Seung C. Ahn & Gareth M. Thomas, 2023. "Likelihood-based inference for dynamic panel data models," Empirical Economics, Springer, vol. 64(6), pages 2859-2909, June.
    12. M. Shahe Emran & Dilip Mookherjee & Forhad Shilpi & M. Helal Uddin, 2021. "Credit Rationing and Pass-Through in Supply Chains: Theory and Evidence from Bangladesh," American Economic Journal: Applied Economics, American Economic Association, vol. 13(3), pages 202-236, July.
    13. Wei, Hao & Yuan, Ran & Zhao, Laixun, 2020. "International talent inflow and R&D investment: Firm-level evidence from China," Economic Modelling, Elsevier, vol. 89(C), pages 32-42.
    14. Carmen Díaz-Roldán & María del Carmen Ramos-Herrera, 2021. "Innovations and ICT: Do They Favour Economic Growth and Environmental Quality?," Energies, MDPI, vol. 14(5), pages 1-17, March.
    15. Andros Gregoriou, 2010. "Corporate Valuation and Dividends: UK Evidence from Panel Unit Root and Cointegration Tests," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(1), pages 15-22, March.
    16. Ronghui Xie & Shengjie Zhang, 2024. "Re†examining the impact of global foreign direct investment (FDI) inflows on haze pollution—considering the moderating mechanism of environmental regulation," Energy & Environment, , vol. 35(6), pages 3186-3209, September.
    17. Na Zhang & Jinqian Deng & Fayyaz Ahmad & Muhammad Umar Draz & Nabila Abid, 2023. "The dynamic association between public environmental demands, government environmental governance, and green technology innovation in China: evidence from panel VAR model," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(9), pages 9851-9875, September.
    18. Oscar Bajo-Rubio & Carmen Diaz-Roldan, 2005. "Optimal endowments of public capital: An empirical analysis for the Spanish regions," Regional Studies, Taylor & Francis Journals, vol. 39(3), pages 297-304.
    19. Wenxuan Ma, 2022. "Exploring the Role of Educational Human Capital and Green Finance in Total-Factor Energy Efficiency in the Context of Sustainable Development," Sustainability, MDPI, vol. 15(1), pages 1-18, December.
    20. Simplice A. Asongu & Nicholas M.Odhiambo, "undated". "Governance and Renewable Energy Consumption in sub-Saharan Africa," Working Papers AESRIWP11, African Economic and Social Research Institute (AESRI).

    More about this item

    JEL classification:

    • F0 - International Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aen:journl:ej41-2-wen. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: David Williams (email available below). General contact details of provider: https://edirc.repec.org/data/iaeeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.