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Estimating the impact of wind generation and wind forecast errors on energy prices and costs in Ireland

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  • Swinand, Gregory P.
  • O'Mahoney, Amy

Abstract

This paper studies the impact of wind generation on system costs and prices in Ireland. The importance of wind power and potential impacts on system costs is of interest to power system planners and policy makers globally. However, the impact of wind generation on system costs has been only studied with limited actual data from power systems with increased wind penetration. The paper uses a unique dataset of half-hourly system demand, generation, forecast and actual wind generation, along with Irish system marginal price (SMP) data from 2008 to autumn 2012. An econometric time-series model of SMP as a function of forecast and realized demand and wind generation yields results which suggest that each 1% increase in wind generation reduces SMP in Ireland by about 0.06%, while each 1% wind forecast error increases SMP about 0.02%. In absolute terms, though, at the mean the impact of wind forecast errors is small, or about 0.4€cent/MWh-wind generated.

Suggested Citation

  • Swinand, Gregory P. & O'Mahoney, Amy, 2015. "Estimating the impact of wind generation and wind forecast errors on energy prices and costs in Ireland," Renewable Energy, Elsevier, vol. 75(C), pages 468-473.
  • Handle: RePEc:eee:renene:v:75:y:2015:i:c:p:468-473
    DOI: 10.1016/j.renene.2014.09.060
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    References listed on IDEAS

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    1. Di Cosmo, Valeria & Malaguzzi Valeri, Laura, 2014. "The incentive to invest in thermal plants in the presence of wind generation," Energy Economics, Elsevier, vol. 43(C), pages 306-315.
    2. O'Mahoney, Amy & Denny, Eleanor, 2013. "Electricity prices and generator behaviour in gross pool electricity markets," Energy Policy, Elsevier, vol. 63(C), pages 628-637.
    3. Felder, Frank A., 2011. "Examining Electricity Price Suppression Due to Renewable Resources and Other Grid Investments," The Electricity Journal, Elsevier, vol. 24(4), pages 34-46, May.
    4. Troy, Niamh & Denny, Eleanor & O'Malley, Mark, 2010. "Base-load cycling on a system with significant wind penetration," MPRA Paper 34848, University Library of Munich, Germany.
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    Citations

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    Cited by:

    1. Slednev, Viktor & Bertsch, Valentin & Ruppert, Manuel & Fichtner, Wolf, 2017. "Highly resolved optimal renewable allocation planning in power systems under consideration of dynamic grid topology," MPRA Paper 79706, University Library of Munich, Germany.
    2. repec:eee:eneeco:v:69:y:2018:i:c:p:1-18 is not listed on IDEAS
    3. Curtis, John & Lynch, Muireann Á. & Zubiate, Laura, 2016. "The impact of the North Atlantic Oscillation on electricity markets: A case study on Ireland," Energy Economics, Elsevier, vol. 58(C), pages 186-198.
    4. Kästel, Peter & Gilroy-Scott, Bryce, 2015. "Economics of pooling small local electricity prosumers—LCOE & self-consumption," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 718-729.
    5. Di Cosmo, Valeria & Malaguzzi Valeri, Laura, 2018. "Wind, storage, interconnection and the cost of electricity generation," Energy Economics, Elsevier, vol. 69(C), pages 1-18.
    6. González-Aparicio, I. & Zucker, A., 2015. "Impact of wind power uncertainty forecasting on the market integration of wind energy in Spain," Applied Energy, Elsevier, vol. 159(C), pages 334-349.
    7. Lisa MH Hall & Alastair Buckley & Jose Mawyin, 2015. "Estimating the Impact of Wind Generation in the UK," Papers 1510.05854, arXiv.org, revised Nov 2015.

    More about this item

    Keywords

    Cost function; Econometrics; Power generation economics; Power system economics; Wind power generation;

    JEL classification:

    • D0 - Microeconomics - - General
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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