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Department of Business and Management Science, Norwegian School of Economics (NHH) Discussion Papers, Department of Business and Management Science, Norwegian School of Economics (NHH)

No 2013/1:
Now or Later? Trading wind power closer to real-time and how poorly designed subsidies lead to higher balancing costs

Johannes Mauritzen ()

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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