IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v94y2016icp474-487.html
   My bibliography  Save this article

The impact of wind power on electricity prices

Author

Listed:
  • Brancucci Martinez-Anido, Carlo
  • Brinkman, Greg
  • Hodge, Bri-Mathias

Abstract

This paper investigates the impact of wind power on electricity prices using a production cost model of the Independent System Operator – New England power system. Different scenarios in terms of wind penetration, wind forecasts, and wind curtailment are modeled in order to analyze the impact of wind power on electricity prices for different wind penetration levels and for different levels of wind power visibility and controllability. The analysis concludes that electricity price volatility increases even as electricity prices decrease with increasing wind penetration levels. The impact of wind power on price volatility is larger in the shorter term (5-min compared to hour-to-hour). The results presented show that over-forecasting wind power increases electricity prices while under-forecasting wind power reduces them. The modeling results also show that controlling wind power by allowing curtailment increases electricity prices, and for higher wind penetrations it also reduces their volatility.

Suggested Citation

  • Brancucci Martinez-Anido, Carlo & Brinkman, Greg & Hodge, Bri-Mathias, 2016. "The impact of wind power on electricity prices," Renewable Energy, Elsevier, vol. 94(C), pages 474-487.
    • Handle: RePEc:eee:renene:v:94:y:2016:i:c:p:474-487
    DOI: 10.1016/j.renene.2016.03.053
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148116302373
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2016.03.053?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 search for a different version of it.

    References listed on IDEAS

    as
    1. Draxl, Caroline & Clifton, Andrew & Hodge, Bri-Mathias & McCaa, Jim, 2015. "The Wind Integration National Dataset (WIND) Toolkit," Applied Energy, Elsevier, vol. 151(C), pages 355-366.
    2. Nicolosi, S., 2010. "Wind power integration, negative prices and power system flexibility - An empirical analysis of extreme events in Germany," MPRA Paper 31834, University Library of Munich, Germany.
    3. Nicolosi, Marco, 2010. "Wind power integration and power system flexibility-An empirical analysis of extreme events in Germany under the new negative price regime," Energy Policy, Elsevier, vol. 38(11), pages 7257-7268, November.
    4. Amor, Mourad Ben & Billette de Villemeur, Etienne & Pellat, Marie & Pineau, Pierre-Olivier, 2014. "Influence of wind power on hourly electricity prices and GHG (greenhouse gas) emissions: Evidence that congestion matters from Ontario zonal data," Energy, Elsevier, vol. 66(C), pages 458-469.
    5. Forrest, Sam & MacGill, Iain, 2013. "Assessing the impact of wind generation on wholesale prices and generator dispatch in the Australian National Electricity Market," Energy Policy, Elsevier, vol. 59(C), pages 120-132.
    6. Ketterer, Janina C., 2014. "The impact of wind power generation on the electricity price in Germany," Energy Economics, Elsevier, vol. 44(C), pages 270-280.
    7. Amor, Mourad Ben & Billette de Villemeur, Etienne & Pellat, Marie & Pineau, Pierre-Olivier, 2014. "Influence of wind power on hourly electricity prices and GHG emissions: Evidence that congestion matters from Ontario zonal data," MPRA Paper 53630, University Library of Munich, Germany.
    8. Clò, Stefano & Cataldi, Alessandra & Zoppoli, Pietro, 2015. "The merit-order effect in the Italian power market: The impact of solar and wind generation on national wholesale electricity prices," Energy Policy, Elsevier, vol. 77(C), pages 79-88.
    9. 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.
    10. Pereira, Adelino J.C. & Saraiva, João Tomé, 2013. "Long term impact of wind power generation in the Iberian day-ahead electricity market price," Energy, Elsevier, vol. 55(C), pages 1159-1171.
    11. Woo, C.K. & Horowitz, I. & Moore, J. & Pacheco, A., 2011. "The impact of wind generation on the electricity spot-market price level and variance: The Texas experience," Energy Policy, Elsevier, vol. 39(7), pages 3939-3944, July.
    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. Gürtler, Marc & Paulsen, Thomas, 2018. "The effect of wind and solar power forecasts on day-ahead and intraday electricity prices in Germany," Energy Economics, Elsevier, vol. 75(C), pages 150-162.
    2. Vika Koban, 2017. "The impact of market coupling on Hungarian and Romanian electricity markets: Evidence from the regime-switching model," Energy & Environment, , vol. 28(5-6), pages 621-638, September.
    3. Bahramian, Pejman & Jenkins, Glenn P. & Milne, Frank, 2021. "The displacement impacts of wind power electricity generation: Costly lessons from Ontario," Energy Policy, Elsevier, vol. 152(C).
    4. Arjmand, Reza & Rahimiyan, Morteza, 2016. "Impact of spatio-temporal correlation of wind production on clearing outcomes of a competitive pool market," Renewable Energy, Elsevier, vol. 86(C), pages 216-227.
    5. Csereklyei, Zsuzsanna & Qu, Songze & Ancev, Tihomir, 2019. "The effect of wind and solar power generation on wholesale electricity prices in Australia," Energy Policy, Elsevier, vol. 131(C), pages 358-369.
    6. Mwampashi, Muthe Mathias & Nikitopoulos, Christina Sklibosios & Konstandatos, Otto & Rai, Alan, 2021. "Wind generation and the dynamics of electricity prices in Australia," Energy Economics, Elsevier, vol. 103(C).
    7. Bell, William Paul & Wild, Phillip & Foster, John & Hewson, Michael, 2017. "Revitalising the wind power induced merit order effect to reduce wholesale and retail electricity prices in Australia," Energy Economics, Elsevier, vol. 67(C), pages 224-241.
    8. Schöniger, Franziska & Morawetz, Ulrich B., 2022. "What comes down must go up: Why fluctuating renewable energy does not necessarily increase electricity spot price variance in Europe," Energy Economics, Elsevier, vol. 111(C).
    9. Concettini, Silvia & Creti, Anna & Gualdi, Stanislao, 2022. "Assessing the regional redistributive effect of renewable power production through a spot market algorithm simulator: The case of Italy," Energy Economics, Elsevier, vol. 114(C).
    10. Mahmood Hosseini Imani & Ettore Bompard & Pietro Colella & Tao Huang, 2021. "Impact of Wind and Solar Generation on the Italian Zonal Electricity Price," Energies, MDPI, vol. 14(18), pages 1-26, September.
    11. Das, Saptarshi & Hittinger, Eric & Williams, Eric, 2020. "Learning is not enough: Diminishing marginal revenues and increasing abatement costs of wind and solar," Renewable Energy, Elsevier, vol. 156(C), pages 634-644.
    12. Gonçalves, Ricardo & Menezes, Flávio, 2022. "The price impacts of the exit of the Hazelwood coal power plant," Energy Economics, Elsevier, vol. 116(C).
    13. Maniatis, Georgios I. & Milonas, Nikolaos T., 2022. "The impact of wind and solar power generation on the level and volatility of wholesale electricity prices in Greece," Energy Policy, Elsevier, vol. 170(C).
    14. Bernath, Christiane & Deac, Gerda & Sensfuß, Frank, 2021. "Impact of sector coupling on the market value of renewable energies – A model-based scenario analysis," Applied Energy, Elsevier, vol. 281(C).
    15. Ederer, Nikolaus, 2015. "The market value and impact of offshore wind on the electricity spot market: Evidence from Germany," Applied Energy, Elsevier, vol. 154(C), pages 805-814.
    16. Ioannidis, Filippos & Kosmidou, Kyriaki & Savva, Christos & Theodossiou, Panayiotis, 2021. "Electricity pricing using a periodic GARCH model with conditional skewness and kurtosis components," Energy Economics, Elsevier, vol. 95(C).
    17. 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.
    18. Thao Pham & Killian Lemoine, 2020. "Impacts of subsidized renewable electricity generation on spot market prices in Germany : Evidence from a GARCH model with panel data," Working Papers hal-02568268, HAL.
    19. 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.
    20. Winkler, Jenny & Gaio, Alberto & Pfluger, Benjamin & Ragwitz, Mario, 2016. "Impact of renewables on electricity markets – Do support schemes matter?," Energy Policy, Elsevier, vol. 93(C), pages 157-167.

    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:94:y:2016:i:c:p:474-487. 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.