ACCESSING THE EFFECT OF RENEWABLES ON THE WHOLESALE POWER MARKET

Mohammad Nure Alam

doi:10.32479/ijeep.10756

Abstract

The purpose of this paper is to examine how rising wind energy generation (in MWh) impact the wholesale power market's volatility (in SEK) across four bidding regions in Sweden. Prior investigations show that though the increase in electricity production from wind energy lowers the average day-ahead electricity wholesale prices, however, uncertainty and volatility of market price could rise due to wind energy's intermittent nature. This study results show that Swedish power market experiences higher price volatility in long-run frequency when the generation of wind electricity increases. The reason for this high and volatile electricity price might be found from inflexible baseload power generation. The paper further suggests that volatility in the Swedish power market could be increased due to ambitious renewable electricity target by the Swedish government. The analysis concludes by providing the evidence that further adjustment in regard to the energy and regulatory policies might foster the better integration of a higher share of renewables into the power system.Keywords: Renewable Electricity, Wind Energy, Electricity Market, Price Volatility, Regulatory PoliciesJEL Classification: Q470DOI: https://doi.org/10.32479/ijeep.10756

Highlights

Throughout the last few decades, a stable and unsurpassed industrialization and economic growth have been experienced around the globe
The regression analysis confirms that every month of the year are significant, which indicate that seasonal variation has a higher impact on the formation of electricity prices
One of the valid results derived from the study is that the mean equations are constant as well as seasonal variations parameter are found significant in Sweden and across all bidding regions in Sweden

Summary

Introduction

Throughout the last few decades, a stable and unsurpassed industrialization and economic growth have been experienced around the globe. It is predicted that the growth rates will be rising faster in the coming decades and will reach 1-2.8% yearly in the 21st century (Acheampong, 2018) These predictions have made by experts by considering a good number of factors includes technological advancement, efficiency in the production capacity, the elasticity of the output and the performances of capital and labour. This rapid increasing growth will be steadier in the developed world and could grow by 4.1% yearly in the 21st century (Markandya et al, 2014; Wu et al, 2018). Yearly average wind energy generation raising significantly world-wide considering the lower marginal costs, increasing wind penetration has been leading various challenges in regard to the operations and controls as a result of intermittency as well as unpredictability

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Conclusion