Dead battery? Wind power, the spot market, and hydro power interaction in the Nordic electricity market
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Date
2011-09Metadata
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- Discussion papers (FOR) [575]
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.