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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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    References listed on IDEAS

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    Citations

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    Cited by:

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    2. Richard Schmalensee, 2013. "The Performance of U.S. Wind and Solar Generating Units," NBER Working Papers 19509, National Bureau of Economic Research, Inc.
    3. repec:aen:journl:ej37-4-petitet is not listed on IDEAS
    4. Hubert Stahn & Jean-Henry Ferrasse & Nandeeta Neerunjun, 2021. "Managing intermittency in the electricity market," Post-Print hal-04552317, HAL.
    5. repec:aen:journl:ej37-1-pineau is not listed on IDEAS
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    7. Etienne Billette de Villemeur & Pierre-Olivier Pineau, 2016. "Integrating Thermal and Hydro Electricity Markets: Economic and Environmental Costs of not Harmonizing Pricing Rules," The Energy Journal, , vol. 37(1), pages 77-100, January.
    8. Marie Petitet & Dominique Finon & Tanguy Janssen, 2016. "Carbon Price instead of Support Schemes: Wind Power Investments by the Electricity Market," The Energy Journal, , vol. 37(4), pages 109-140, October.
    9. repec:aen:journl:ej38-2-li is not listed on IDEAS
    10. Green, Richard & Vasilakos, Nicholas, 2011. "The economics of offshore wind," Energy Policy, Elsevier, vol. 39(2), pages 496-502, February.
    11. Hirth, Lion & Ueckerdt, Falko & Edenhofer, Ottmar, 2015. "Integration costs revisited – An economic framework for wind and solar variability," Renewable Energy, Elsevier, vol. 74(C), pages 925-939.
    12. Green, Richard & Hu, Helen & Vasilakos, Nicholas, 2011. "Turning the wind into hydrogen: The long-run impact on electricity prices and generating capacity," Energy Policy, Elsevier, vol. 39(7), pages 3992-3998, July.
    13. Elberg, Christina & Hagspiel, Simeon, 2015. "Spatial dependencies of wind power and interrelations with spot price dynamics," European Journal of Operational Research, Elsevier, vol. 241(1), pages 260-272.
    14. Sebastian Schwenen & Karsten Neuhoff, 2024. "Renewable Energy and Equilibrium Hedging in Electricity Forward Markets," The Energy Journal, , vol. 45(5), pages 105-123, September.
    15. repec:aen:journl:ej37-si2-green is not listed on IDEAS
    16. Stefano Cló & Gaetano D’Adamo, 2014. "The Impact of Solar Penetration on Solar and Gas Market Value: an application to the Italian Power Market," Working Papers 1405, Department of Applied Economics II, Universidad de Valencia.
    17. repec:dau:papers:123456789/15247 is not listed on IDEAS
    18. Clò, Stefano & D'Adamo, Gaetano, 2015. "The dark side of the sun: How solar power production affects the market value of solar and gas sources," Energy Economics, Elsevier, vol. 49(C), pages 523-530.
    19. Rintamäki, Tuomas & Siddiqui, Afzal S. & Salo, Ahti, 2017. "Does renewable energy generation decrease the volatility of electricity prices? An analysis of Denmark and Germany," Energy Economics, Elsevier, vol. 62(C), pages 270-282.
    20. Albert Hiesl & Amela Ajanovic & Reinhard Haas, 2020. "On current and future economics of electricity storage," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 10(6), pages 1176-1192, December.
    21. Green, Richard & Léautier, Thomas-Olivier, 2015. "Do costs fall faster than revenues? Dynamics of renewables entry into electricity markets," TSE Working Papers 15-591, Toulouse School of Economics (TSE).
    22. Mauritzen, Johannes, 2012. "Dead Battery? Wind Power, the Spot Market, and Hydro Power Interaction in the Nordic Electricity Market," Working Paper Series 908, Research Institute of Industrial Economics.
    23. 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).
    24. N. Gülpınar & F. Oliveira, 2014. "Analysis of relationship between forward and spot markets in oligopolies under demand and cost uncertainties," Computational Management Science, Springer, vol. 11(3), pages 267-283, July.

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    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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