Discussion Papers, Department of Business and Management Science, Norwegian School of Economics (NHH)
Dead Battery? Wind Power, The Spot Market, and Hydro Power Interaction in the Nordic Electricity Market
Abstract: It is well established within both the economics and power
system engineering literature that hydro power can act as a complement to
large amounts of intermittent energy. In particular, hydro power can act as
a "battery" where large amounts of wind power are installed. This paper
attempts to extend that literature by describing the effects of
cross-border wind and hydro power interaction in a day-ahead "spot" market.
I use simple econometric distributed lag models with data from the Nordic
electricity market and a sample of Norwegian hydro power plants with water
storage magazines. I suggest that wind power mainly affects prices in the
hydro power area by way of shifting the shadow value of water. The
empirical results support this view.
Keywords: Wind Power; Hydro Power; Nordic Electricity Market; Empirical; (follow links to similar papers)
JEL-Codes: Q00; (follow links to similar papers)
34 pages, September 29, 2011
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