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The Effects of Electricity Generation from Solar and Wind Energy on the Day Ahead Market-Clearing Prices and Price Volatility: The Turkish Case

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  • Mustafa ÇaÄŸrı PEKER
  • AyÅŸen SÄ°VRÄ°KAYA

Abstract

Solar and wind generation are the primary tools to prevent climate change and high carbon emissions. Due to their intermittent generation characteristics, solar and wind power plants have a different impact on the market-clearing price formation compared to conventional generation sources. The paper investigates the solar and wind generation effect on the day ahead market-clearing price in Turkey between the 2016 and 2022. We used a 2nd order polynomial learner model to analyze the impact of solar and wind generation level on the market-clearing price level and volatility. We find that Dutch TTF increases market-clearing price with a coefficient of 0.24. An increase in wind and solar generation reduce the market-clearing price. Solar generation is ineffective on the market-clearing price below a certain demand level. Wind generation reduces market-clearing price with a 37.78 coefficient at low demand levels and a 6.55 coefficient at high demand levels. Solar generation has a price-reducing effect with 5.55 at high demand levels. Finally, Dutch TTF and wind generation increased volatility with coefficients of 0.04 and 0.69; solar generation reduced volatility with a coefficient of 0.83.

Suggested Citation

  • Mustafa ÇaÄŸrı PEKER & AyÅŸen SÄ°VRÄ°KAYA, 2023. "The Effects of Electricity Generation from Solar and Wind Energy on the Day Ahead Market-Clearing Prices and Price Volatility: The Turkish Case," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 2.
    • Handle: RePEc:fis:journl:230205
    DOI: 10.25295/fsecon.1215578
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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