IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v256y2026iphs0960148125021433.html

Optimizing wind farm locations for revenue and reduced electricity costs in deregulated electricity markets

Author

Listed:
  • Salmelin, Markus
  • Sridhar, Araavind
  • Karjunen, Hannu
  • Honkapuro, Samuli
  • Lassila, Jukka

Abstract

With an increasing share of renewable power in the energy mix, planning of new renewable energy production sites becomes increasingly important. Having geographically highly centralized generation leads to overlapping peaks in generation, which are directly seen in the day-ahead markets as increasing electricity price volatility. By analyzing the impact of added generation on day-ahead prices, optimal sites can be identified that maximize investor revenue and societal savings, helping reduce regional disparities in development. This paper uses wind power estimates based on ERA5 global weather data, together with NordPool price data, to evaluate optimal sites for a new wind farm. The paper discusses the value of dispersed generation and co-planning of future wind farm installations. Cannibalization of the day-ahead market price due to centralized generation is addressed, and it is found that additional wind power capacity in high-capacity areas could cannibalize revenue by 9 €/MWh. The results from the applied methodology show that there are areas where it is possible to generate high revenue while simultaneously providing society great benefit in reduced electricity price for energy users in the day ahead-markets of on average 1.1–1.4 €/MWh over the whole year.

Suggested Citation

  • Salmelin, Markus & Sridhar, Araavind & Karjunen, Hannu & Honkapuro, Samuli & Lassila, Jukka, 2026. "Optimizing wind farm locations for revenue and reduced electricity costs in deregulated electricity markets," Renewable Energy, Elsevier, vol. 256(PH).
    • Handle: RePEc:eee:renene:v:256:y:2026:i:ph:s0960148125021433
    DOI: 10.1016/j.renene.2025.124479
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148125021433
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2025.124479?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Satymov, Rasul & Bogdanov, Dmitrii & Breyer, Christian, 2022. "Global-local analysis of cost-optimal onshore wind turbine configurations considering wind classes and hub heights," Energy, Elsevier, vol. 256(C).
    2. Glenk, Gunther & Reichelstein, Stefan, 2022. "The economic dynamics of competing power generation sources," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    3. Olauson, Jon, 2018. "ERA5: The new champion of wind power modelling?," Renewable Energy, Elsevier, vol. 126(C), pages 322-331.
    4. Sun, Haiying & Gao, Xiaoxia & Yang, Hongxing, 2020. "A review of full-scale wind-field measurements of the wind-turbine wake effect and a measurement of the wake-interaction effect," Renewable and Sustainable Energy Reviews, Elsevier, vol. 132(C).
    5. Christoffer Hallgren & Johan Arnqvist & Stefan Ivanell & Heiner Körnich & Ville Vakkari & Erik Sahlée, 2020. "Looking for an Offshore Low-Level Jet Champion among Recent Reanalyses: A Tight Race over the Baltic Sea," Energies, MDPI, vol. 13(14), pages 1-26, July.
    6. Zhang, Xiaofeng & Wang, Qiang & Ye, Shitong & Luo, Kun & Fan, Jianren, 2024. "Efficient layout optimization of offshore wind farm based on load surrogate model and genetic algorithm," Energy, Elsevier, vol. 309(C).
    7. López Prol, Javier & Steininger, Karl W. & Zilberman, David, 2020. "The cannibalization effect of wind and solar in the California wholesale electricity market," Energy Economics, Elsevier, vol. 85(C).
    8. Liebensteiner, Mario & Naumann, Fabian, 2022. "Can carbon pricing counteract renewable energies’ cannibalization problem?," Energy Economics, Elsevier, vol. 115(C).
    9. Reichenberg, L. & Ekholm, T. & Boomsma, T., 2023. "Revenue and risk of variable renewable electricity investment: The cannibalization effect under high market penetration," Energy, Elsevier, vol. 284(C).
    10. López Prol, Javier & Zilberman, David, 2023. "No alarms and no surprises: Dynamics of renewable energy curtailment in California," Energy Economics, Elsevier, vol. 126(C).
    Full references (including those not matched with items on IDEAS)

    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. Rafal Cieslik, 2025. "The Renewable Energy Paradox: Second-Generation Economic Challenges in the Global Energy Transition," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 971-991.
    2. Salmelin, Markus & Inkeri, Eero & Sridhar, Araavind & Honkapuro, Samuli & Lassila, Jukka, 2025. "Effect of large-scale variable electric loads and operation strategy in decentralized electricity markets: Case of large electrolyzers," Energy, Elsevier, vol. 340(C).
    3. Justus Haucap & Jonathan Meinhof, 2022. "Die Strompreise der Zukunft [Electricity Prices of the Future]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 102(1), pages 53-60, May.
    4. Stiewe, Clemens & Xu, Alice Lixuan & Eicke, Anselm & Hirth, Lion, 2025. "Cross-border cannibalization: Spillover effects of wind and solar energy on interconnected European electricity markets," Energy Economics, Elsevier, vol. 143(C).
    5. Gualtieri, G., 2022. "Analysing the uncertainties of reanalysis data used for wind resource assessment: A critical review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 167(C).
    6. Rebecca J. Barthelmie & Kaitlyn E. Dantuono & Emma J. Renner & Frederick L. Letson & Sara C. Pryor, 2021. "Extreme Wind and Waves in U.S. East Coast Offshore Wind Energy Lease Areas," Energies, MDPI, vol. 14(4), pages 1-25, February.
    7. Abuzayed, A., 2025. "From Model Optimality to Market Reality: Do Electricity Markets Support Renewable Investments?," Cambridge Working Papers in Economics 2558, Faculty of Economics, University of Cambridge.
    8. Julian Geis & Fabian Neumann & Michael Lindner & Philipp Hartel & Tom Brown, 2025. "Price Formation in a Highly-Renewable, Sector-Coupled Energy System," Papers 2509.10092, arXiv.org.
    9. Anas Abuzayed, 2025. "From model optimality to market reality: do electricity markets support renewable investments?," Working Papers EPRG2521, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    10. López Prol, Javier & Paul, Arijit, 2024. "Profitability landscapes for competitive photovoltaic self-consumption," Energy Policy, Elsevier, vol. 188(C).
    11. Katikas, Loukas & Dimitriadis, Panayiotis & Koutsoyiannis, Demetris & Kontos, Themistoklis & Kyriakidis, Phaedon, 2021. "A stochastic simulation scheme for the long-term persistence, heavy-tailed and double periodic behavior of observational and reanalysis wind time-series," Applied Energy, Elsevier, vol. 295(C).
    12. Yang, Haolin & Xu, Siqi & Gao, Weijun & Wang, Yafei & Li, You & Wei, Xindong, 2024. "Mitigating long-term financial risk for large customers via a hybrid procurement strategy considering power purchase agreements," Energy, Elsevier, vol. 295(C).
    13. Li, Jiayi & Zhang, Zihang & Zheng, Tao & Tang, Jun & Lei, Zhenyu & Gao, Shangce, 2025. "Discrete bi-population differential evolution for optimizing complex wind farm layouts in diverse terrains," Energy, Elsevier, vol. 335(C).
    14. Gil Ruiz, Samuel Andrés & Barriga, Julio Eduardo Cañón & Martínez, J. Alejandro, 2021. "Wind power assessment in the Caribbean region of Colombia, using ten-minute wind observations and ERA5 data," Renewable Energy, Elsevier, vol. 172(C), pages 158-176.
    15. Soysal, Emilie Rosenlund, 2025. "Market-based wind power investments under financial frictions," Applied Energy, Elsevier, vol. 391(C).
    16. Arkaitz Rabanal & Alain Ulazia & Gabriel Ibarra-Berastegi & Jon Sáenz & Unai Elosegui, 2018. "MIDAS: A Benchmarking Multi-Criteria Method for the Identification of Defective Anemometers in Wind Farms," Energies, MDPI, vol. 12(1), pages 1-19, December.
    17. Shiva Madadkhani & Nils Sturma & Mathias Drton & Svetlana Ikonnikova, 2026. "Mapping the causal structure of price formation in Texas's transitioning electricity market," Papers 2604.14257, arXiv.org, revised Jun 2026.
    18. Srihari Sundar & Michael T. Craig & Ashley E. Payne & David J. Brayshaw & Flavio Lehner, 2023. "Meteorological drivers of resource adequacy failures in current and high renewable Western U.S. power systems," Nature Communications, Nature, vol. 14(1), pages 1-13, December.
    19. Hayes, Liam & Stocks, Matthew & Blakers, Andrew, 2021. "Accurate long-term power generation model for offshore wind farms in Europe using ERA5 reanalysis," Energy, Elsevier, vol. 229(C).
    20. Salmelin, Markus & Hyypiä, Jaakko & Satymov, Rasul & Galimova, Tansu & Talus, Kim & Karjunen, Hannu & Lassila, Jukka & Breyer, Christian, 2025. "Exploring the Shetland Islands’ potential as a green e-hydrogen export hub for Europe," Energy, Elsevier, vol. 339(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    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:eee:renene:v:256:y:2026:i:ph:s0960148125021433. 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: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/renewable-energy .

    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.