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Large-scale wind power integration and wholesale electricity trading benefits: Estimation via an ex post approach

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  • Gil, Hugo A.
  • Gomez-Quiles, Catalina
  • Riquelme, Jesus

Abstract

The integration of large-scale wind power has brought about a series of challenges to the power industry, but at the same time a number of benefits are being realized. Among those, the ability of wind power to cause a decline in the electricity market prices has been recognized. In quantifying this effect, some models used in recent years are based on simulations of the market supply-side and the price clearing process. The accuracy of the estimates depend on the quality of the input data, the veracity of the adopted scenarios and the rigorousness of the solution technique. In this work, a series of econometric techniques based on actual ex post wind power and electricity price data are implemented for the estimation of the impact of region-wide wind power integration on the local electricity market clearing prices and the trading savings that stem from this effect. The model is applied to the case of Spain, where the estimated savings are compared against actual credit and bonus expenses to ratepayers. The implications and extent of these results for current and future renewable energy policy-making are discussed.

Suggested Citation

  • Gil, Hugo A. & Gomez-Quiles, Catalina & Riquelme, Jesus, 2012. "Large-scale wind power integration and wholesale electricity trading benefits: Estimation via an ex post approach," Energy Policy, Elsevier, vol. 41(C), pages 849-859.
  • Handle: RePEc:eee:enepol:v:41:y:2012:i:c:p:849-859
    DOI: 10.1016/j.enpol.2011.11.067
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    References listed on IDEAS

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    Cited by:

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    5. Brian Rivard and Adonis Yatchew, 2016. "Integration of Renewables into the Ontario Electricity System," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
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    7. Hirth, Lion, 2013. "The market value of variable renewables," Energy Economics, Elsevier, vol. 38(C), pages 218-236.
    8. Cho, Seolhee & Kim, Jiyong, 2015. "Feasibility and impact analysis of a renewable energy source (RES)-based energy system in Korea," Energy, Elsevier, vol. 85(C), pages 317-328.
    9. Lion Hirth, 2013. "The Market Value of Variable Renewables. The Effect of Solar and Wind Power Variability on their Relative Price," RSCAS Working Papers 2013/36, European University Institute.
    10. Sébastien Phan & Fabien Roques, 2015. "Is the depressive effect of renewables on power prices contagious? A cross border econometric analysis," Cambridge Working Papers in Economics 1527, Faculty of Economics, University of Cambridge.
    11. de Menezes, Lilian M. & Houllier, Melanie A., 2015. "Germany's nuclear power plant closures and the integration of electricity markets in Europe," Energy Policy, Elsevier, vol. 85(C), pages 357-368.
    12. Dillig, Marius & Jung, Manuel & Karl, Jürgen, 2016. "The impact of renewables on electricity prices in Germany – An estimation based on historic spot prices in the years 2011–2013," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 7-15.
    13. Würzburg, Klaas & Labandeira, Xavier & Linares, Pedro, 2013. "Renewable generation and electricity prices: Taking stock and new evidence for Germany and Austria," Energy Economics, Elsevier, vol. 40(S1), pages 159-171.
    14. Zamani-Dehkordi, Payam & Rakai, Logan & Zareipour, Hamidreza, 2016. "Deciding on the support schemes for upcoming wind farms in competitive electricity markets," Energy, Elsevier, vol. 116(P1), pages 8-19.
    15. Jägemann, Cosima, 2014. "An illustrative note on the system price effect of wind and solar power - The German case," EWI Working Papers 2014-10, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    16. Woo, C.K. & Ho, T. & Zarnikau, J. & Olson, A. & Jones, R. & Chait, M. & Horowitz, I. & Wang, J., 2014. "Electricity-market price and nuclear power plant shutdown: Evidence from California," Energy Policy, Elsevier, vol. 73(C), pages 234-244.
    17. Lilian de Menezes & Melanie A. Houllier, 2013. "Modelling Germany´s Energy Transition and its Potential Effect on European Electricity Spot Markets," EcoMod2013 5395, EcoMod.
    18. Woo, C.K. & Moore, J. & Schneiderman, B. & Ho, T. & Olson, A. & Alagappan, L. & Chawla, K. & Toyama, N. & Zarnikau, J., 2016. "Merit-order effects of renewable energy and price divergence in California’s day-ahead and real-time electricity markets," Energy Policy, Elsevier, vol. 92(C), pages 299-312.
    19. Chi-Keung Woo, Ira Horowitz, Jay Zarnikau, Jack Moore, Brendan Schneiderman, Tony Ho, and Eric Leung, 2016. "What Moves the Ex Post Variable Profit of Natural-Gas-Fired Generation in California?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    20. Sreedharan, P. & Farbes, J. & Cutter, E. & Woo, C.K. & Wang, J., 2016. "Microgrid and renewable generation integration: University of California, San Diego," Applied Energy, Elsevier, vol. 169(C), pages 709-720.
    21. Denny, Eleanor & O'Mahoney, Amy & Lannoye, Eamonn, 2017. "Modelling the impact of wind generation on electricity market prices in Ireland: An econometric versus unit commitment approach," Renewable Energy, Elsevier, vol. 104(C), pages 109-119.
    22. Gullì, Francesco & Balbo, Antonio Lo, 2015. "The impact of intermittently renewable energy on Italian wholesale electricity prices: Additional benefits or additional costs?," Energy Policy, Elsevier, vol. 83(C), pages 123-137.
    23. Colmenar-Santos, Antonio & Campíñez-Romero, Severo & Pérez-Molina, Clara & Mur-Pérez, Francisco, 2015. "Repowering: An actual possibility for wind energy in Spain in a new scenario without feed-in-tariffs," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 319-337.
    24. Jägemann, Cosima & Hagspiel, Simeon & Lindenberger, Dietmar, 2013. "The Economic Inefficiency of Grid Parity: The Case of German Photovoltaics," EWI Working Papers 2013-19, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).

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    Keywords

    Wind power; Electricity prices; Benefits;

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