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The impact of the North Atlantic Oscillation on electricity markets: A case study on Ireland

Listed author(s):
  • Curtis, John
  • Lynch, Muireann Á.
  • Zubiate, Laura

The North Atlantic Oscillation (NAO) is a large-scale atmospheric circulation pattern driving climate variability in north-western Europe. As the deployment of wind-powered generation expands on electricity networks across Europe, the impacts of the NAO on the electricity system will be amplified. This study assesses the impact of the NAO, via wind-power generation, on the electricity market considering thermal generation costs, wholesale electricity prices and wind generation subsidies. A Monte Carlo approach is used to model NAO phases and generate hourly wind speed time-series data, electricity demand and fuel input data. A least-cost unit commitment and economic dispatch model is used to simulate an island electricity system, modelled on the all-island Irish electricity system. The impact of the NAO obviously depends on the level of wind capacity within an electricity system. Our results indicate that on average a switch from negative to positive NAO phase can reduce thermal generation costs by up to 8%, reduce wholesale electricity prices by as much as €1.5/MWh, and increase wind power generators' revenue by 12%.

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File URL: http://www.sciencedirect.com/science/article/pii/S014098831630175X
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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 58 (2016)
Issue (Month): C ()
Pages: 186-198

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Handle: RePEc:eee:eneeco:v:58:y:2016:i:c:p:186-198
DOI: 10.1016/j.eneco.2016.07.003
Contact details of provider: Web page: http://www.elsevier.com/locate/eneco

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