The European Journal of Comparative Economics

ISSN: 1824-2979

EJCE Year: 2016, July. Volume: 13 - Issue: 1

Wind power feed-in impact on electricity prices in Germany 2009-2013

by François Benhmad ; Jacques Percebois

Start page: 81 - End page: 96

Keywords: RES, Electricity spot prices, merit order effect, volatility

Jel code: Q41; Q42; Q48

Abstract:

Until quite recently no electricity system had faced the challenges associated with high penetrations of renewable energy sources (RES). In this paper, we carry out an empirical analysis for Germany, as a country with high penetration of wind energy, to investigate the well-known merit-order effect. Our main empirical findings suggest that the increasing share of wind power in-feed induces a decrease of electricity spot price level but an increase of spot prices volatility. Furthermore, the relationship between wind power and spot electricity prices can be strongly impacted by European electricity grids interconnection which behaves like a safety valve lowering volatility and limiting the price decrease. Therefore, the impacts of wind generated electricity on electricity spot markets are less clearly pronounced in interconnected systems.

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