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Storing Wind for a Rainy Day: What Kind of Electricity Does Denmark Export?

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  • Richard Green
  • Nicholas Vasilakos

Abstract

On windy days, Denmark tends to export electricity to its neighbours, and to import power on calm days. Storing electricity in this way thus allows the country to deal with the intermittency of wind generation. We show that this kind of behaviour is theoretically optimal when a region with wind and thermal generation can trade with one based on hydro power. However, annual trends in Denmark's trade follow its output of thermal generation, Nordic production of hydro power, and the amount of water available to Scandinavian generators, not wind generation. We estimate the cost of volatility in Denmark's wind output to equal between 4% and 8% of its market value.

Suggested Citation

  • Richard Green & Nicholas Vasilakos, 2010. "Storing Wind for a Rainy Day: What Kind of Electricity Does Denmark Export?," Discussion Papers 10-19, Department of Economics, University of Birmingham.
  • Handle: RePEc:bir:birmec:10-19
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    More about this item

    Keywords

    Electricity; Wind generation; Hydro generation; storage; international trade;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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