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The Effects of German Wind and Solar Electricity on French Spot Price Volatility: An Empirical Investigation

Author

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  • Adhurim Haxhimusa

    () (Research Institute for Regulatory Economics, Vienna University of Economics and Business)

Abstract

We examine the relationship between German wind and solar electricity and French spot price volatility. Using hourly data, we find that French imports from Germany driven by German wind and solar electricity sometimes decrease, sometimes increase the volatility of French spot prices. These two opposing effects depend on the shape of the French supply function and on the French demand. We, therefore, estimate different coefficients for imports depending on different demand levels. We acknowledge the endogeneity problem in identifying these effects and employ instrumental variable techniques to circumvent this problem. Our results show the urgent need for further coordination of national energy policies in order to reduce the potential for negative spill over effects of nationally driven energy policies in neighbouring countries as European electricity markets are becoming more integrated.

Suggested Citation

  • Adhurim Haxhimusa, 2018. "The Effects of German Wind and Solar Electricity on French Spot Price Volatility: An Empirical Investigation," Department of Economics Working Papers wuwp258, Vienna University of Economics and Business, Department of Economics.
  • Handle: RePEc:wiw:wiwwuw:wuwp258
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    Cited by:

    1. Rinne, Sonja, 2018. "Radioinactive: Are nuclear power plant outages in France contagious to the German electricity price?," CIW Discussion Papers 3/2018, University of M√ľnster, Center for Interdisciplinary Economics (CIW).

    More about this item

    Keywords

    Wind and Solar Electricity; Price Volatility; Market Integration; Electricity Markets;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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