| dc.description.abstract | This thesis investigates the dynamics of the Norwegian electricity market, focusing on
how hydro and wind generation affect average price levels and volatility. In addition, the
analysis investigates how the increased occurrences of changed weather patterns due to
climate change might affect these relationships. The research aims to explore the complex
interplay between weather-dependent electricity sources and market prices, offering insights
into how these elements interact within the different price areas in Norway.
Methodologically, this study employs a statistical ARMA-EGARCH modeling framework
to analyze the electricity market. The empirical findings indicate a statistically significant
impact of increased hydrological balance and wind generation on reducing average price
levels. However, the effects on price volatility present a contrast: an increased hydrological
balance is associated with greater stability, while wind generation, explained by its
intermittent nature, contributes to increased volatility. These results highlight the distinct
influences of different renewable energy sources on market dynamics.
The analysis reveals "inverse leverage effects" across all Norwegian price areas, underscoring
the market’s greater ability in adapting to negative market shocks. A comparative
analysis with a historical control period has highlighted a potentially increased influence
of hydrological balance and wind generation on market prices. Looking ahead, given the
projections on climatic and structural developments, this trend is anticipated to continue,
potentially escalating risks and consequently, could diminish incentives for investments in
production.
The object of this study is to contribute to a better understanding of the complexities
inherent in an electricity market dominated by renewable sources, and evolving climatic
and structural changes. | en_US |
