Discussion Papers, Department of Business and Management Science, Norwegian School of Economics (NHH)
Now or Later? Trading wind power closer to real-time and how poorly designed subsidies lead to higher balancing costs
Abstract: An important challenge facing many deregulated electricity
markets is dealing with the increasing penetration of intermittent
generation. Simulation studies have pointed to the advantages of trading
closer to real-time with large amounts of intermittent generation. Using
Danish data, I show that, as expected, shortfalls increase the probability
of trade on the shortterm market. But in the period between 2010 and 2012
surpluses are shown to decrease the probability of trade. This unexpected
result is likely explained by wind power policies that discourages trading
on Elbas and leads to unnecessarily high balancing costs. I use a
rollingwindow regression to support this claim.
Keywords: Deregulated electricity markets; intermittent generation; wind power; (follow links to similar papers)
JEL-Codes: Q42; Q48; (follow links to similar papers)
22 pages, April 25, 2013
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