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Now or Later? Trading Wind Power Closer to Real Time And How Poorly Designed Subsidies Lead to Higher Balancing Costs

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  • Johannes Mauritzen

Abstract

Simulation studies have pointed to the advantages of trading closer to real-time with large amounts of wind power. Using Danish data, I show that, as expected, shortfalls increase the probability of trade on the short-term market, Elbas. But in the period studied between 2010 and 2012 surpluses are shown to decrease the probability of trade. This unexpected result is likely explained by wind power policies that discourage trading on Elbas and lead to unnecessarily high balancing costs. I use a rolling-windows regression to support this claim.

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  • Johannes Mauritzen, 2015. "Now or Later? Trading Wind Power Closer to Real Time And How Poorly Designed Subsidies Lead to Higher Balancing Costs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    • Handle: RePEc:aen:journl:ej36-4-mauritzen
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    References listed on IDEAS

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    1. Holttinen, H., 2005. "Optimal electricity market for wind power," Energy Policy, Elsevier, vol. 33(16), pages 2052-2063, November.
    2. Weber, Christoph, 2010. "Adequate intraday market design to enable the integration of wind energy into the European power systems," Energy Policy, Elsevier, vol. 38(7), pages 3155-3163, July.
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    Cited by:

    1. Fatih Karanfil and Yuanjing Li, 2017. "The Role of Continuous Intraday Electricity Markets: The Integration of Large-Share Wind Power Generation in Denmark," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    2. Spodniak, Petr & Ollikka, Kimmo & Honkapuro, Samuli, 2019. "The Relevance of Wholesale Electricity Market Places: The Nordic Case," Working Papers 126, VATT Institute for Economic Research.
    3. Casimir Lorenz & Clemens Gerbaulet, 2017. "Wind Providing Balancing Reserves: An Application to the German Electricity System of 2025," Discussion Papers of DIW Berlin 1655, DIW Berlin, German Institute for Economic Research.
    4. Goutte, Stéphane & Vassilopoulos, Philippe, 2019. "The value of flexibility in power markets," Energy Policy, Elsevier, vol. 125(C), pages 347-357.
    5. Rintamäki, Tuomas & Siddiqui, Afzal S. & Salo, Ahti, 2020. "Strategic offering of a flexible producer in day-ahead and intraday power markets," European Journal of Operational Research, Elsevier, vol. 284(3), pages 1136-1153.
    6. Hu, Xiao & Jaraitė, Jūratė & Kažukauskas, Andrius, 2021. "The effects of wind power on electricity markets: A case study of the Swedish intraday market," Energy Economics, Elsevier, vol. 96(C).
    7. Alangi, Somayeh Rahimi & Bjørndal, Endre & Bjørndal, Mette, 2022. "Can the European intraday market be designed as a congestion management tool?," Energy Economics, Elsevier, vol. 113(C).
    8. Bjørndal, Endre & Bjørndal, Mette & Midthun, Kjetil & Zakeri, Golbon, 2016. "Congestion Management in a Stochastic Dispatch Model for Electricity Markets," Discussion Papers 2016/12, Norwegian School of Economics, Department of Business and Management Science.
    9. Klaus Skytte & Lucien Bobo, 2019. "Increasing the value of wind: From passive to active actors in multiple power markets," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 8(3), May.
    10. Rintamäki, Tuomas & Siddiqui, Afzal S. & Salo, Ahti, 2017. "Does renewable energy generation decrease the volatility of electricity prices? An analysis of Denmark and Germany," Energy Economics, Elsevier, vol. 62(C), pages 270-282.

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