Abstract
Wind power is crucial to decarbonizing electricity markets but is intermittent, which complicates operational management. We assess the welfare impact of wind power on the Spanish electricity market during the years 2009–2018, with a focus on how wind impacts congestion and reliability costs. In the baseline results, for an additional GWh of forecasted wind generation, we estimate that operational costs go up by about 0.19 EUR/MWh compared to an average of 3.85 EUR/MWh. We find no evidence of these marginal impacts significantly increasing with wind availability. Using detailed bidding data for congestion and reliability markets, we highlight how changes in market design can reduce the negative impacts of wind power on the operation of the grid.
Original language | English (US) |
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Article number | 107200 |
Journal | Energy Economics |
Volume | 129 |
DOIs | |
State | Published - Jan 2024 |
Funding
Reguant acknowledges the support of NSF grant SES-1455084. This project/article has received funding from the European Research Council (ERC) under the European Union's Horizon 2020 research and innovation programme (grant agreement No 101001732-ENECML). We thank Sarrin Chethick, Matthew Stadnicki, Almudena Valle, and Tomas Wilner for excellent research assistance. A public repository with replication data and code can be found at https://github.com/mreguant/wind-costs-intermittency.
Keywords
- Electricity markets
- Energy transition
- Intermittency
- Wind power
ASJC Scopus subject areas
- Economics and Econometrics
- General Energy